Scott used $4,000,000 from his savings account that paid an annual interest of 5% to purchase a hardware store.After one year,Scott sold the business for $4,100,000. His accounting profits is:

A) $300,000
B) $100,000
C) $80,000
D) $20,000

Question

​Scott used $4,000,000 from his savings account that paid an annual interest of 5% to purchase a hardware store.After one year,Scott sold the business for $4,100,000. His accounting profits is:A) ​$300,000B) $100,000C) $80,000D) ​$20,000

Alexandria Bozeman · Accepted Answer

Final Answer : B, Explanation :  Scott's initial investment was $4,000,000 with an annual interest of 5%. So, his one-year interest income would be:$4,000,000 x 5% = $200,000After one year, Scott sold the business for $4,100,000. So, his accounting profit would be:Accounting Profit = Selling Price - Purchase PriceAccounting Profit = $4,100,000 - $4,000,000Accounting Profit = $100,000Therefore, the correct answer is B) $100,000, which represents Scott's accounting profit after selling the hardware store.

Scott used $4,000,000 from his savings account that paid an annual interest of 5% to purchase a hardware store.After one year,Scott sold the business for $4,100,000. His accounting profits is:

A) $300,000
B) $100,000
C) $80,000
D) $20,000

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​Scott used $4,000,000 from his savings account that paid an annual interest of 5% to purchase a hardware store.After one year,Scott sold the business for $4,100,000. His accounting profits is:A) ​$300,000B) $100,000C) $80,000D) ​$20,000

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Learning Objectives

Learning Objectives

Related questions

Scott used $4,000,000 from his savings account that paid an annual interest of 5% to purchase a hardware store.After one year,Scott sold the business for $4,100,000. His accounting profits is:

A) $300,000
B) $100,000
C) $80,000
D) $20,000