What is the relationship between accounting profit and economic profit
A)Accounting profit = Economic profit + Implicit costs
B)Accounting profit = Economic profit - Implicit costs
C)Economic profit = Accounting profit + Explicit costs
D)Economic profit = Accounting profit - Explicit costs

Question

Quizplus · Accepted Answer

Accounting profit is the profit calculated using the generally accepted accounting principles (GAAP). Economic profit is the profit calculated by taking into account all the costs, including the implicit costs. Implicit costs are the costs that are not explicitly paid to any outside party, such as the opportunity cost of the owner's time. Therefore, accounting profit is equal to economic profit plus implicit costs.

What Is the Relationship Between Accounting Profit and Economic Profit