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Which is the lower Accounting Profit or Economic Profit?

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Question ajoutée par Ahmed Abd Alwahab Awad Ibrahim , Chief Accounting , ICCDP
Date de publication: 2014/09/27
georgei assi
par georgei assi , مدير حسابات , المجموعة السورية

Accounting profit: is the difference between total revenue and cost accounting, and cost accounting are explicit costs and phenomenon. Economic profit: is the difference between total revenue and the economic cost, and the costs Alaguetsadah.chml accounting costs and implicit costs that are not explicit, which is linked to the opportunity cost of the alternative. If the total revenue is greater than the economic cost it achieved an economic profit, and if the opposite were realized economic loss, but if the cost is equal to total revenue achieved economic profit accounting

VENKITARAMAN KRISHNA MOORTHY VRINDAVAN
par VENKITARAMAN KRISHNA MOORTHY VRINDAVAN , Project Execution Manager & Accounts Manager , ALI INTERNATIONAL TRADING EST.

Economic Profits are lower from the very beginning and tend to equalize with Accounting profits at a later stage.

Accounting profit is the difference between the total revenue and the total cost, excluding the cost of the opportunity. On the other hand, economic cost is the difference between the total revenue and the total cost, including the cost of the opportunity.

Economic profit is obtained when the revenue exceeds the opportunity’s cost. On the contrary, a firm can be said to have accounting profits if the revenue exceeds the accounting cost of the firm. In other words, accounting profit can be referred to as the revenue obtained by a firm after all the economic costs are met.

One of the differences that can be seen, is that the economic profit will always be lesser when compared to accounting profits. When compared to economic profit, the accounting profits are only given during leap years.

When considering accounting profits, it is defined as the revenue deducted from the explicit costs, and economic profits, as the revenue deducted from explicit and implicit costs.

When calculating accounting profits, the things that are considered include leased assets, non-cash adjustments/transactions for depreciation, provisions, allowances, and capitalising development costs. When calculating economic profits, several things, like opportunity costs, residual value,  inflation level changes, tax rates, and interest rates on cash flow, are taken into account.

When compared to economic profits, accounting profit is calculated for a certain period of time.

 

mohamed Hakim CMA CPA Candidate
par mohamed Hakim CMA CPA Candidate , Accounting Manager , Andersen saudi arabia

Economic profit = total revenue  -(  explicit + implicit )cost 

Accounting profit > economic profit

Divyesh Patel
par Divyesh Patel , Assistant Professional Officer- Treasury , City Of Cape Town

Accountingprofit = total monetary revenue- total costs.

 

Economic profit is the difference between total monetary revenue and total costs, but total costs include both explicit and implicit costs.

 

Economic profit includes the opportunity costs associated with production and is therefore lower than accounting profit.

 

Ahmed Abd Alwahab Awad Ibrahim
par Ahmed Abd Alwahab Awad Ibrahim , Chief Accounting , ICCDP

Thank you for All & Agree with All

Utilisateur supprimé
par Utilisateur supprimé

agreed with mr georgie and mr venkitaraman

Utilisateur supprimé
par Utilisateur supprimé

Economic profit is the lower for simple reason that economic cost is the sum of explicit cost and opportunity cost so the economic cost is higher .

Ahmed Maher
par Ahmed Maher , Admins , Crown Nile

i agree for all answers .

this video contain more explanation

https://www.youtube.com/watch?v=06j_zPdPWOY

FITAH MOHAMED
par FITAH MOHAMED , Financial Manager , FUEL AND ENERGY CO for transportion petroleum materials

AGREE WITH MR VENKITARAMAN 

Barkat Ali
par Barkat Ali , Accountant , Abdullah Bin Ahmed Bin Mohd Al Muzahmi Trading

Economic profit

Total revenue minus total cost, including both explicit and

implicit costs

Accounting profit

Total revenue minus total explicit cost

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