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

question 27

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.If downloads generate $50,000 in revenue during the first year,then his business _____

• A)has an accounting profit but an economic loss.
• B)has an accounting loss and an economic profit.
• C)has both accounting and economic profits.
• D)has both an accounting and an economic loss.
• E)has a normal profit.

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Definitions:

Trade Creditors

Suppliers or vendors that allow businesses to buy goods or services on account, paying them at a later date.

Flexible Lending Arrangements

Financial agreements that offer adaptable repayment terms to accommodate the borrower's financial situation.

Asset-Based Lending

A type of financing where loans are given based on the value of an individual's or company's assets.

Loan Collateral

Assets or property pledged by a borrower to secure a loan, serving as a guarantee for the lender that the loan will be repaid.