The difference between economic profit and accounting profit is that economic profit is calculated based on both implicit and explicit costs whereas accounting profit is calculated based on explicit costs only.

Economic Profit

The difference between total revenue and total costs, including both explicit and implicit costs, representing the true profitability of a company.

Accounting Profit

The difference between the total revenue received from sales and the total explicit costs of a business.

Explicit Costs

Direct payments made to others in the course of running a business, such as wages, rent, and materials.