Anvi Runs a Coffee Shop That Has Annual Revenues of $300,000

question 38

Multiple Choice

Anvi runs a coffee shop that has annual revenues of $300,000, supply costs of $60,000, and employee salaries of $60,000. She has the option of renting out the coffee shop for $80,000 per year, and she has three outside offers from competitors to work as a senior barista at Starbucks (for an annual salary of $30,000) , at Simon's coffee house (for an annual salary of $40,000) , and at Peet's coffee shop (for an annual salary of $60,000) . She can only hold one job at a time. What should Anvi do?

• A) She should rent out her coffee shop and take the job at Starbucks.
• B) She should rent out her coffee shop and take the job at Simon's.
• C) She should rent out her coffee shop and take the job at Peet's.
• D) She should continue to run her coffee shop.

---

Definitions:

Contra-Asset

An account on a company's balance sheet that reduces the value of related, primary asset accounts.

Appropriating Retained Earnings

The process of allocating retained earnings, often to specific purposes or reserves, as determined by a company's management or board of directors.

Accumulated Depreciation

The total depreciation for a fixed asset that has been charged to expense since that asset was acquired and made available for use.

Retained Earnings

Accumulated net income after dividends that is reinvested in the business.