CA Foundation Exam > CA Foundation Questions > Economic cost excludes :a)Accounting cost + e...
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Economic cost excludes :
- a)Accounting cost + explicit cost
- b)Accounting cost+ implicit cost
- c)Explicit cost + implicit cost
- d)Accounting cost +opportunity cost
Correct answer is 'A'. Can you explain this answer?
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Verified Answer
Economic cost excludes :a)Accounting cost + explicit costb)Accounting ...
Economic profit can be both positive and negative and is calculated as follows: Total Revenues - (Explicit Costs + Implicit Costs) = Economic Profit. Accounting Profit - Implicit Costs = Economic Profit.
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Economic cost excludes :a)Accounting cost + explicit costb)Accounting ...
Economic Cost Excludes Accounting Cost Explicit Cost
Economic cost is the total cost of production that includes both explicit and implicit costs. It refers to the value of all resources used in the production process, including the opportunity cost of using those resources. However, economic cost excludes accounting cost explicit cost.
Accounting Cost Explicit Cost
Accounting cost is the monetary expenses incurred in the production process that can be easily recorded in financial statements. Explicit cost, on the other hand, refers to the direct monetary expenses incurred in the production process, such as wages, rent, and raw materials.
Why Economic Cost Excludes Accounting Cost Explicit Cost?
Economic cost excludes accounting cost explicit cost because economic cost considers both explicit and implicit costs. Implicit cost refers to the opportunity cost of using resources in the production process. For example, if a business owner uses their own land to build the factory, the implicit cost is the opportunity cost of not using that land for other purposes. It is not recorded in financial statements, and thus, is not included in accounting cost explicit cost.
Conclusion
In conclusion, economic cost is the total cost of production, including both explicit and implicit costs, while accounting cost explicit cost only considers the direct monetary expenses incurred in the production process. Therefore, economic cost excludes accounting cost explicit cost.
Economic cost is the total cost of production that includes both explicit and implicit costs. It refers to the value of all resources used in the production process, including the opportunity cost of using those resources. However, economic cost excludes accounting cost explicit cost.
Accounting Cost Explicit Cost
Accounting cost is the monetary expenses incurred in the production process that can be easily recorded in financial statements. Explicit cost, on the other hand, refers to the direct monetary expenses incurred in the production process, such as wages, rent, and raw materials.
Why Economic Cost Excludes Accounting Cost Explicit Cost?
Economic cost excludes accounting cost explicit cost because economic cost considers both explicit and implicit costs. Implicit cost refers to the opportunity cost of using resources in the production process. For example, if a business owner uses their own land to build the factory, the implicit cost is the opportunity cost of not using that land for other purposes. It is not recorded in financial statements, and thus, is not included in accounting cost explicit cost.
Conclusion
In conclusion, economic cost is the total cost of production, including both explicit and implicit costs, while accounting cost explicit cost only considers the direct monetary expenses incurred in the production process. Therefore, economic cost excludes accounting cost explicit cost.
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Community Answer
Economic cost excludes :a)Accounting cost + explicit costb)Accounting ...
To carry out production the owner either will arrange resources from outside or he will give his own also .
so when he arrange resources from outside that cost is explicit cost .
and when he arrange resources from his own that estimated cost is what called implicit cost
so when he arrange resources from outside that cost is explicit cost .
and when he arrange resources from his own that estimated cost is what called implicit cost
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Economic cost excludes :a)Accounting cost + explicit costb)Accounting cost+ implicit costc)Explicit cost + implicit costd)Accounting cost +opportunity costCorrect answer is 'A'. Can you explain this answer?
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Economic cost excludes :a)Accounting cost + explicit costb)Accounting cost+ implicit costc)Explicit cost + implicit costd)Accounting cost +opportunity costCorrect answer is 'A'. Can you explain this answer? for CA Foundation 2024 is part of CA Foundation preparation. The Question and answers have been prepared according to the CA Foundation exam syllabus. Information about Economic cost excludes :a)Accounting cost + explicit costb)Accounting cost+ implicit costc)Explicit cost + implicit costd)Accounting cost +opportunity costCorrect answer is 'A'. Can you explain this answer? covers all topics & solutions for CA Foundation 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for Economic cost excludes :a)Accounting cost + explicit costb)Accounting cost+ implicit costc)Explicit cost + implicit costd)Accounting cost +opportunity costCorrect answer is 'A'. Can you explain this answer?.
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