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    This posting shows how to calculate accounting profit.

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    Jill resigns from her job, at which she was earning $50,000 per year, and uses her $100,000 savings, on which she was earning 5 percent interest, to start a business. In the first year, she earns revenue of $150,000, and her costs are as follows.

    Rent $25,000
    Utilities $12,000
    Wages $30,000
    Materials $20,000

    A. Calculate Jill's accounting profit.

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    Solution Preview

    Jill's accounting profit:

    Revenues 150,000
    Rent ...

    Solution Summary

    The solution shows exactly how to calculate accounting profit.