What Is the Difference Between Accounting Profit and Economic Profit

question 149

Multiple Choice

What is the difference between accounting profit and economic profit?

• A) They are the same thing.
• B) They are only different if the accountant makes a mistake.
• C) Accounting profit is usually smaller than economic profits.
• D) Accounting profit makes no allowance for several implicit costs, including equity capital, while economic profit takes these costs into account.