Ariana withdrew $400,000 out of her personal savings account and used it to start her new Internet cafe. The savings account pays 3% interest per year. During the first year of her business, Adriana sold 2,000 cups of coffee for $2.50 per cup and 4,000 hours of Internet time, also at $2.50 per hour. During the first year, the business made monetary outlays of $9,000. You may assume that there is no opportunity cost to Ariana's time. Ariana's accounting profit for the year was

Question

Business

Giovanna Alvarez

17 March, 15:25

Ariana withdrew $400,000 out of her personal savings account and used it to start her new Internet cafe. The savings account pays 3% interest per year. During the first year of her business, Adriana sold 2,000 cups of coffee for $2.50 per cup and 4,000 hours of Internet time, also at $2.50 per hour. During the first year, the business made monetary outlays of $9,000. You may assume that there is no opportunity cost to Ariana's time. Ariana's accounting profit for the year was

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Quinten Decker · Answer 1

The Ariana's accounting profit for the year was $6,000

Explanation:

Accounting Profit : The accounting profit is that profit which records the difference of total revenues and total direct cost.

Where,

Total revenues includes sales revenues

And total cost includes monetary cost, etc.

So,

Accounting profit = Total revenues - Total cost

where

Total revenues = 2,000 * $2.5 + 4,000 * $2.5 = $15,000

Monetary cost = $9,000

So,

Accounting profit = $15000 - $9000 = $6,000

Hence, the Ariana's accounting profit for the year was $6,000