Question

Distinguish among the main organizational forms of business and explain the difference between accounting profits and economic profits

Short answer

The term "economic profit" refers to increasing the value of the goods produced.

Accounting profit is the amount left over after all costs and expenses have been deducted from total revenue.

Step-by-step solution

Introduction.

Economic revenue is the money of income made after both direct and indirect costs have indeed been deducted.

A income statement income, or sales less expenses, is known as capital gain.

Given data.

Hidden costs, which are typically the costs of a company's resources, are used to determine economic profit.

After eliminating the direct cost of operating the company, accounting cost is the profit of cash left over.

Explanation.

• Implicit costs, which are often the pricing of an organization's assets, are used to calculate economic profit. Economic profit is tasked with making the most of an organization's assets while factoring for alternative uses of those assets.

• Accounting profit is often known as a company's online income or bottom line. It's the profit left over after various costs and expenses from total revenue or total sales, as per generally accepted accounting principles (GAAP).