Question 2

Refer to the scenario below to answer the questions.

Upon graduating with an accounting degree, you open your own accounting firm of which you are the sole employee. To start the firm you passed on a job offer with a large accounting firm that offered you a salary of RM60,000 annually. Last year you earned a total revenue of RM100,000. Rent and supplies last year were RM50,000.

2.1) Your annual economic costs are __________. (1M)

2.2) Your annual economic profit is __________. (1M)

2.3) Your annual accounting profit is __________. (1M)

2.4) Based on the above information, describe the condition of your firm. (2M)

_________________________________________________________________________________________________________________________________________________________________________________________________________________________________

(5 Marks)