Accounting, Economic & Normal Profit - Economics Concepts, Business Economics & Finance Video Lecture | Business Economics & Finance - B Com

my friends Tony is confused in
accounting profit and economic profit
don't confuse anymore let me explain
these concepts
toan the economic profit defined as
total revenue minus total implicit and
explicit costs implicit cost is the
opportunity cost of the business and
explicit costs are daily expenses of the
business economic profit formula equal
total revenue less total implicit costs
less total explicit costs in simple
words if we define accounting profit
consists of total revenue minus total
explicit costs in simple mathematical
formula accounting profit is equal total
revenue minus total explicit costs
the accounting profit have the famous
name net income the net income always
show in the income statement in bottom
line it is most view number in the
financial statements of the company net
income is also part of the retained
earning accounting profit is calculated
with the help of the accounting
principles set by authorized policy
board
let compare the accounting profit and
economic profit side-by-side for better
explanation for Tony dot accounting
profit is calculated the rule and
regulations set by General accepted
accounting principle but economic profit
is calculated with the help of economic
rules and procedures the explicit cost
only used in the calculation of the
accounting profit in economic profit
explicit cost and implicit cost both
less in total revenue the accounting
profit is used income tax and financial
performance of the company but economic
profit is used the company to determine
the market entry stay or exist