Accounting profit is equal to which of the following?
(i) economic profit + implicit costs
(ii) total revenue - implicit costs
(iii) total revenue - opportunity costs

Question

Quizplus · Accepted Answer

Accounting profit only takes into account explicit costs (such as wages and rent) and does not include implicit costs (such as opportunity costs). Therefore, option (i) is incorrect. Option (ii) is also incorrect because it includes implicit costs. Option (iii) is the only choice that correctly defines accounting profit as total revenue minus only explicit costs.

Accounting Profit Is Equal to Which of the Following