Question

Kumar owns a small seafood restaurant, where he works full-time in the kitchen. His total revenue last year was $100,000, and his rent was $3,000 per month. He pays his one employee $2,000 per month, and the cost of ingredients and overhead averages $500 per month. Kumar could earn $35,000 per year as the manager of a competing seafood restaurant nearby. His total accounting profit last year was:

Answer 1

Accounting proft 36,000

Step-by-step explanation:

revenue 100,000

rent expense

3,000 x 12 month 36,000

salaries expense

2,000 x 12 month 24,000

other operating expense

500 x 12 month 6,000

Total expenses (66,000)

Accounting proft 36,000

he accounting do not consider the opportunity cost, that would bethe economic profit.

The accounting only recognize accrued expenses, not potencial income.