Asked by Shane 2Wavyy on May 01, 2024
Verified
If you had economic profits of $50,000,implicit costs of $100,000,and sales of $500,000 how much were your accounting profits?
Economic Profits
The margin between an organization's complete earnings and its aggregate expenditures, covering both visible and hidden costs.
Implicit Costs
Implicit costs are the opportunity costs of using resources owned by the business for production instead of lending, selling, or renting them out.
Accounting Profits
The net income for a company determined by subtracting total expenses from total revenues, according to generally accepted accounting principles (GAAP).
- Distinguish between financial profits as understood in economics versus those recognized in accounting.
- Understand the explicit and implicit costs related to business decisions.
Verified Answer
Learning Objectives
- Distinguish between financial profits as understood in economics versus those recognized in accounting.
- Understand the explicit and implicit costs related to business decisions.
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