Question

ABC Co sells merchandise to a customer for a sales price of $500 on account. The cost of the goods sold is $200. The journal entry to record the sale on ABC's books should include: A credit to Merchandise inventory of $200. A debit to Sales Revenue of $500. A credit to Cost of goods sold of $300. A credit to cash of $500.

Answer 1

The firm's accounting profit can be calculated as $50,000.

Step-by-step explanation:

Accounting Profit Calculation

The accounting profit of a firm is calculated by subtracting the explicit costs from the total revenues. In this case, the firm's total revenues were $1 million and the explicit costs were $600,000 for labor, $150,000 for capital, and $200,000 for materials. Therefore, the accounting profit can be calculated as: $1,000,000 - ($600,000 + $150,000 + $200,000) = $50,000.