Accuracy Accounting,Inc Required: Prepare Accuracy Accounting,Inc

question 101

Essay

Accuracy Accounting,Inc.sells accounting textbooks.The following information summarizes Accuracy Accounting's operating activities for the year:
$\begin{array}{|l|r|}\hline \text { Merchandise Inventory, January 1 } & \$ 10,000 \\\hline \text { Merchandise Inventory, December 31 } & 7,000 \\\hline \text { Purchases } & 95,000 \\\hline \text { Selling and Administrative Expenses } & 65,000 \\\hline \text { Sales Revenue } & 180,000 \\\hline\end{array}$ Required: Prepare Accuracy Accounting,Inc.'s income statement for the year ended December 31.

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Definitions:

Total Cost Curve

A graph that depicts how the total costs of production vary with the level of output.

Economic Profit

A measure of performance that captures the surplus generated from business activities after accounting for both explicit and implicit costs.

Shuts Down

A temporary or permanent cessation of operations by a firm when it is not covering variable costs of production or facing insolvency.

Total Cost

The entirety of spending on the production of products or services, incorporating both costs that are constant and those that can change.