The Total Assets and the Total Liabilities of Samantha Financial

question 10

Multiple Choice

The total assets and the total liabilities of Samantha Financial Services, are shown below. There were no capital contributions and withdrawals during the year. $$\begin{array} { | l | r | r | } \hline & \text { Assets } & \text { Liabilities } \\\hline \text { Beginning of year } & \$ 425,000 & \$ 280,000 \\\hline \text { End of year } & 500,000 & 325,000 \\\hline\end{array}$$ What was the amount of net income for the year?

• A) $75,000
• B) $45,000
• C) $30,000
• D) $120,000

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Definitions:

Comparative Advantage

The ability of an individual, firm, or country to produce a good or service at a lower opportunity cost than competitors.

Opportunity Cost

The expense incurred by not choosing the second-best option when making a decision or selection.

Comparative Advantage

The capacity of an entity to generate a product or service with a smaller opportunity cost than others.

Absolute Advantage

The capacity of an entity to manufacture a product or provide a service more effectively than its rivals, by utilizing fewer resources.