Which of the following statements is true regarding the differences between economic and accounting costs?
A) Accounting costs include all implicit and explicit costs.
B) Economic costs include implied costs only.
C) Accountants consider only implicit costs when calculating costs.
D) Accounting costs include only explicit costs.

Question

Quizplus · Accepted Answer

Accounting costs only include explicit costs which are actual out-of-pocket expenditures. Economic costs, on the other hand, include both explicit and implicit costs. Implicit costs are the opportunity costs of resources owned by a firm that are not purchased in the market, such as the cost of using the owner's own time or the cost of using a building owned by the firm.

Which of the Following Statements Is True Regarding the Differences