Asked by Malaisha Easter on Jul 13, 2024
Verified
Which is greater -- economic profit or accounting profit?
Economic Profit
The surplus gained from undertaking an activity after accounting for both explicit and implicit costs, differing from accounting profit.
Accounting Profit
The financial gain calculated by subtracting total explicit costs from total revenue, reflecting the company's bookkeeping earnings.
- Identify the distinctions between explicit and implicit expenses as they relate to economic and accounting profitability.
Verified Answer
ZH
Zachary HarrillJul 14, 2024
Final Answer :
Economic profit = Accounting profit - Implicit costs. Economic profit could be equal to accounting profit if there were no implicit costs, but in the presence of implicit costs, accounting profit will be greater than economic profit.
Learning Objectives
- Identify the distinctions between explicit and implicit expenses as they relate to economic and accounting profitability.