Scenario 9.1 Jane Left Her Job at Siemens and Started Her Own

question 75

Multiple Choice

Scenario 9.1
Jane left her job at Siemens and started her own boutique. She used to earn $50,000 annually at Siemens. She took a loan of $10,000 and used $20,000 from her personal savings to begin her venture. She agreed to repay the loan with 10% interest. Her business is bringing in $80,000 annually. She has rent and labor expenses of $15,000. Also assume that Jane could have used her own money i.e. $20,000 to buy stocks in Intel which would have returned 5% to her last year.
-Nancy owns and operates a drug store that generates total revenues worth $30 million in a particular year. Her accounting costs for the year are $25 million. She could have earned $3 million in this year, if she had worked as a consultant for a pharmaceutical firm. Further, she could have earned 5 percent interest on $40 million of her own money that she invests in the business this year. Nancy's accounting profit in this year is _____ and her economic profit is _____.

• A)$5 million; zero
• B)$5 million; $3 million
• C)$5 million; $8 million
• D)zero; $3 million
• E)$3 million; $43 million

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Definitions:

Landscape Gardeners

Landscape gardeners specialize in designing, creating, and maintaining outdoor spaces, including gardens, parks, and other landscaped areas, blending artistic design with horticultural expertise.

Partnership Liability

The legal responsibility that partners in a business partnership have for the debts and obligations of the partnership.

Partnership Agreement

A legal document that outlines the rights, responsibilities, and profit and loss distribution among partners in a business partnership.

Business Profits

The financial gain that a business earns from its operations, after subtracting all expenses, overheads, and costs associated with its activities.