Accounting profit, Managerial Accounting

Assignment Help:

Accounting Profit is a company's sum total earnings, computed according to Generally Accepted Accounting Principles (GAAP), and involves the explicit costs of operating business, like interest, depreciation and taxes.

Accounting profits tend to be more than economic profits as they skip some implicit costs, like opportunity costs.

For instance, if you invest $100,000 to establish a business and gained $120,000 in profit then your accounting profit would be $20,000. Economic profit would put in implicit costs; like the opportunity cost of $50,000 should you have been employed in its place during that particular period. As shown by this, you would have an economic loss of $30,000 i.e. $120,000 - $100,000 - $50,000).

 


Related Discussions:- Accounting profit

Provision for contingencies, After determining the amount of working capita...

After determining the amount of working capital as in above, a specific amount say 5 percent or 10 percent may be added to cover contingencies. This is to be noted that facts depen

International management challenges of globalization., what is the topic ab...

what is the topic about? what are the practical implications? what are the practical criticisms?

Relevant cost, what are characteristics of relevant cost?

what are characteristics of relevant cost?

Explain the process of financial intermediation, Question 1: i) Explai...

Question 1: i) Explain the process of financial intermediation and discuss the existence of banks. ii) Examine the implications of the existence of financial intermediarie

Eoq mathematical model, EOQ mathematical model As costs of ordering and...

EOQ mathematical model As costs of ordering and holding stock are equal at the EOQ point, we can build a simple mathematical model to solve the problem, as follows: (Q/ 2) X

Transfer pricing, Transfer pricing sometimes entails using different transf...

Transfer pricing sometimes entails using different transfer pricing systems: one for tax purposes, and one for internal decision making, even though maintaining two systems can be

Queuing problems, Queuing problems There are two main approaches to que...

Queuing problems There are two main approaches to queuing problems: •    simulation •    queuing theory formula Where simple situations apply, queuing theory should be used

Compute the effect of relaxing credit effort on net profit, M/s ABC is seei...

M/s ABC is seeing relaxing its collection efforts. At current its sales are as Rs.40 lakhs, the ACP is here 20 days and variable cost to sales ratio is .8 and bad debts are as .05

Minimal regret criterion-laplace criterion of rationality, Minimal Regret C...

Minimal Regret Criterion : This method seeks to minimize the maximum regret that would occur from choosing a particular strategy or alternative.  The regret is the opportunit

Differential analysis, Barker Company has a single product called a Zet. Th...

Barker Company has a single product called a Zet. The company normally produces and sells 80,000 Zets each year at a selling price of $40 per unit. The company’s unit costs at this

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd