Ask Question
26 June, 21:41

Which of the following expressions is correct? A. economic profit = total revenue - implicit costsB. accounting profit = economic profit + implicit costsC. accounting profit = total revenue - implicit costsD. economic profit = accounting profit + explicit costs

+2
Answers (1)
  1. 27 June, 00:04
    0
    B. accounting profit = economic profit + implicit costs

    Explanation:

    Implicit cost are the cost that already incurred but is not necessary to report such as opportunity cost. Whereas explicit cost are those expenses which involve the financial transaction and it is being paid.

    Accounting profit is calculated by deducting the explicit cost from the revenue as follow.

    * Accounting Profit = Revenue - Explicit cost

    Economic profit is calculated by deducting both explicit and implicit costs from revenue.

    Economic Profit = Revenue - Explicit costs - Implicit cost

    So, using Accounting profit formula we conclude that

    Economic Profit = (Revenue - Explicit costs) - Implicit cost

    Economic Profit = * Accounting profit - Implicit costs

    Accounting Profit = Economic profit + implicit cost
Know the Answer?
Not Sure About the Answer?
Get an answer to your question ✅ “Which of the following expressions is correct? A. economic profit = total revenue - implicit costsB. accounting profit = economic profit + ...” in 📙 Business if there is no answer or all answers are wrong, use a search bar and try to find the answer among similar questions.
Search for Other Answers