Harvey Develops Gaming Apps from Home Instead of Working as an Engineer

question 12

Multiple Choice

Harvey develops gaming apps from home instead of working as an engineer and earning $50,000 a year.He has invested $20,000 to upgrade to the hardware that he needs and estimates his expenses at $17,000 a year.Downloads generated $130,000 in revenue during the first year.What are his explicit costs?

• A)$37,000
• B)$50,000
• C)$43,000
• D)$93,000
• E)$130,000

---

Definitions:

Accounts Receivable

This represents the funds owed to a business by customers for goods or services delivered or used but not yet paid for.

Net Operating Income

Represents the profitability from normal business operations, excluding income and expenses from unusual or non-recurring items.

Credit Card Company

A Credit Card Company is a financial institution that issues credit cards to consumers, extending a line of credit for purchases with the agreement that the consumer will pay back the borrowed amount, plus any applicable interest.

Allowance for Doubtful Accounts

Allowance for doubtful accounts is an accounting provision that estimates the amount of receivables that may not be collectible due to customer defaults.