Myron Worked at a Factory Where He Earned $20,000 Per

question 18

Multiple Choice

Myron worked at a factory where he earned $20,000 per year.He quit his job and opened a bumper sticker business.After one year,his business earned $60,000 in sales revenue and he incurred $30,000 in direct business expenses.If he received no salary from the new business,what is his accounting profit?

• A)$10,000
• B)$20,000
• C)$40,000
• D)$30,000
• E)$60,000

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Definitions:

Net Working Capital

Net working capital refers to the difference between a company's current assets and its current liabilities.

Overhead Expenses

Ongoing business costs not directly tied to creating a product or service but necessary for running the business, such as rent, utilities, and administrative expenses.

Foregone Depreciation

The concept relating to the depreciation that could have been claimed for tax purposes but was not, often due to timing or election of different tax treatments.

Opportunity Cost

The loss of potential gain from other alternatives when one alternative is chosen.