Accounting profit & Economic profit

This is a simple presentation slide about Accounting profit & Economic Profit. Preapered for Micro economics, Bangladesh University of Professionals.

1. Accounting & Economic Profit

2. S M Maruf Siddiqe
ID- B1405139

3. What is Accounting Profit?
an accounting profit is the excess of business income
over the business expenses.
 The business earns money after selling their goods or
services.
 If the money they earn is more than the money they
spend for making/providing the goods/services, it is
said that the business has made an accounting profit.

4. Thus we can say that an accounting profit is the
excess of accounting income over accounting
expenses.
Accounting Profit = Total Revenue – Total Expenses

5. What is Economic Profit?
Economic profit is not just the excess of
total accounting income over the total
accounting expense. To the cost of an
investment, it also adds the opportunity
lost cost of another investment option.

6. What is Economic Profit?
Thus an economic profit means that not only
did you make a profit on your investment, but
you made more profit than you would have
made otherwise.
Economic Profit = Total Income – Total
Expenses – Opportunity Lost Cost

7. Difference Between Accounting Difference Between Accounting
and Economic Profitand Economic Profit
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.

8. Difference Between Accounting and Difference Between Accounting and
Economic ProfitEconomic Profit
Economic profit is obtained when the
revenue exceeds the opportunity’s cost.
accounting profit can be referred to as the
revenue obtained by a firm after all the
economic costs are met.
The economic profit will always be lesser
when compared to accounting profits.

9. Why Economical Profit?
After calculating
Accounting Profit
After calculating
Economic Profit

10. Thank you