Sam Quits His Job as an Airline Pilot and Opens

question 10

Multiple Choice

Sam quits his job as an airline pilot and opens his own pilot training school. He was earning $40,000 as a pilot. He withdraws $10,000 from his savings where he was earning 6 percent interest and uses the money in his new business. He uses a building he owns as a hanger and could rent it out for $5,000 per year. He rents a computer for $1,200, buys office supplies for $500, rents an airplane for $6,000, pays $1,300 for fuel and maintenance, and hires one worker for $30,000. Sam's total revenue from pilot training classes this year equaled $90,400. Sam's accounting profit this year equals:

• A) $45,600.
• B) $51,400.
• C) $39,000.
• D) $44,800.

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Definitions:

Trade Secrets

Information, including formulas, practices, processes, designs, instruments, patterns, or compilations of information, that is not generally known or readily accessible to others, providing a business advantage.

Bilateral

Involving or affecting two sides equally; binding on both parties.

Nondisclosure Agreement

A legal contract between parties to keep certain shared information confidential.

Contractual Capacity

This term refers to the ability of a party to legally enter into a contract, often requiring them to be of a certain age and have a sound mind.