60. A business generates $500,000 in sales revenue, but after deducting total expenses, it reports a final profit of $80,000. What are total expenses?
Answer: B
Total expenses are $420,000.
To determine the total expenses, you subtract the profit from the sales revenue. In this case, $500,000 in sales revenue minus the $80,000 profit gives total expenses of $420,000.
A) $80,000
This option incorrectly represents the total expenses as equal to the profit. In reality, expenses must be accounted for alongside profit to ascertain the total financial outflow. Therefore, this figure does not reflect the business's total expenditures.
B) $420,000
This option accurately reflects the total expenses calculated by subtracting the profit of $80,000 from the sales revenue of $500,000. This calculation correctly demonstrates the relationship between revenue, expenses, and profit.
C) $500,000
Choosing this option suggests that all sales revenue has been spent on expenses, leaving no profit. However, since the business reported a profit of $80,000, this figure is not viable as it contradicts the given profit information.
D) $580,000
This option incorrectly implies that the expenses exceed the sales revenue, which is not possible in this context. Given the reported profit, the total expenses cannot surpass the revenue, making this option invalid.
Conclusion
The correct option, $420,000, accurately reflects the total expenses incurred by the business after accounting for the profit. All other options fail to represent the financial situation correctly, either by miscalculating the expenses or contradicting the profit reported. Thus, option B is the definitive answer.