Refer to Scenario 7

question 195

Multiple Choice

Refer to Scenario 7.6 below to answer the question(s) that follow.
SCENARIO 7.6: Upon graduating with an accounting degree, you open your own accounting firm of which you and your assistant are the only employees. To start the firm you passed on a job offer with a large accounting firm that offered you a salary of $50,000 annually. Last year you earned a total revenue of $120,000. Rent and supplies last year were $50,000. Your assistant's salary is $30,000 annually.
-Refer to Scenario 7.6. Your annual operating profit is

• A) -$10,000.
• B) $40,000.
• C) $70,000.
• D) $80,000.

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Definitions:

Net New Equity

The difference between equity capital raised by issuing new shares and the equity capital repurchased or retired over a specific period.

Operating Cash Flow

Funds arising from an enterprise's standard operational processes, demonstrating whether the enterprise can generate adequate positive cash flow to support and increase its activities.

Millions

A numerical unit representing one thousand thousand, or 1,000,000, often used to quantify currency, population, or other large-scale counts.

Net Working Capital

The difference between a company's current assets and its current liabilities, indicating short-term financial health and liquidity.