Suppose That a Firm Earned $500,000 in Total Revenue

question 165

Multiple Choice

Suppose that a firm earned $500,000 in total revenue.At the same time,it incurred labor costs of $200,000; economic depreciation of $50,000; normal profit of $75,000; interest paid to the bank of $25,000; and used other factors of production that cost $100,000.The economic profit earned by the firm equals

• A) $275,000.
• B) $175,000.
• C) $50,000.
• D) $200,000.
• E) $500,000.

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Definitions:

End-Of-Period Spreadsheet

A financial report used to compile and summarize the accounting information at the end of an accounting period, including balances for assets, liabilities, and equity.

Income Statement Columns

Divisions in the income statement document that categorize and display revenues, expenses, and profit or loss data.

Net Income

A company's profit margin post the deduction of all expenses and taxation from the total revenue.

Net Loss

The result when a company's expenses exceed its revenues during a specific period, indicating a negative income.