Assume Brad Worked as a Contractor for a Year and Had

question 53

Multiple Choice

Assume Brad worked as a contractor for a year and had revenues of $120,000 and explicit cost of $70,000.If he could have been paid $80,000 working for a computer company,his accounting profit as a contractor was ____ and his economic profit was ____.

• A) $50,000; -$30,000
• B) $10,000; $50,000
• C) $40,000; $50,000
• D) $50,000; $40,000

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Definitions:

Salary Expense

The total amount paid to employees as salaries over a period of time, representing a liability for services received by the business.

Fees Payable

Liabilities or amounts owed by a company for services rendered by others, not yet paid at the balance sheet date.

Balance Sheet

An accounting document showing the worth of a company's assets, debts, and owner's equity on a particular date.

Asset

Resources owned by a business that have economic value and can provide future benefits.