Profit by cost or what is called economic profit is a more theoretical measure based on the alternative actions that could have been taken.
But accounting profit on the other hand is calculated based on what has already been taken, and measurable results over a given period One of the most important differences between them is also the method of calculating them. The accounting profit is calculated after deducting the explicit costs (such as wages, rent, etc.), while the economic profit includes the explicit and implicit costs together. On this basis, the accounting profit represents the real profits of the company, while the economic profit refers to Its efficiency, and whether it allocates its resources in the best possible way. Accordingly, economic profit is very important in making future management decisions, and it is used only for internal uses only.
