Joey's Lawncutting Service Rents Office Space from Joey's Dad for $300

question 64

Multiple Choice

Joey's Lawncutting Service rents office space from Joey's dad for $300 per month.A similar office space in the same building rents for $545 per month.What is the economic profit earned by Joey's dad?

• A) Profit of $245
• B) Profit of $100
• C) Loss of $100
• D) Loss of $245

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Definitions:

Noncurrent Assets

Long-term assets not expected to be liquidated or turned into cash within one year, such as property, plant, and equipment.

Unrealized Gains

Increases in value of assets that have not been sold yet, and therefore, the gains are not reflected in the financial statements as actual income.

Trading Securities

Securities that management intends to actively trade for profit.

Trading Securities

Financial assets such as stocks or bonds, purchased with the intention of selling them in the short term to profit from price fluctuations.