Asked by Francine Fiscor on Jul 26, 2024
Verified
Can economic profit ever exceed accounting profit?
Economic Profit
is the excess of total revenue over the total costs, including both explicit and implicit costs.
Accounting Profit
Accounting profit is the net income a company reports on its financial statements, calculated as total revenues minus explicit costs and depreciation.
- Differentiate between explicit and implicit costs, comprehending their repercussions on economic and accounting profit.
Verified Answer
IE
Ibeth EstévezJul 30, 2024
Final Answer :
No. 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, economic profit will be less than accounting profit.
Learning Objectives
- Differentiate between explicit and implicit costs, comprehending their repercussions on economic and accounting profit.