Consider the Following Information About a Business Diane Opened Last

question 38

Multiple Choice

Consider the following information about a business Diane opened last year: price = $20, quantity sold = 25,000; implicit cost = $255,000; explicit cost = $360,000. Assuming that all relevant costs and revenue are noted, what was Diane's accounting profit?

• A)$140,000
• B)-$115,000
• C)-$140,000
• D)$115,000
• E)$245,000

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Definitions:

Retained Earnings

The portion of net income that is kept within the company rather than distributed to shareholders as dividends, often used for reinvestment.

Net Income

The amount of profit left over after all operating expenses, taxes, and interest payments have been deducted from total revenue.

Dividend

A portion of a company's earnings distributed to shareholders, usually in the form of cash or additional stock.

Treasury Stock

Shares that were once part of the outstanding shares but were bought back by the issuing company.