Accounting Profit

Reviewed by Raphael Zeder | Updated May 19, 2019


A company’s total revenue minus its total explicit costs.


Assume a carpenter produces 1’000 chairs, which he then sells at a price of $100 each. His total revenue will add up to $100’000. If he faces total costs of $60’000, accounting profit will amount to $40’000 ($100’000 – $60’000).


As the name suggests accounting profit is an essential part of accounting. It is used to provide a true and fair view of the results of a company’s operations. However it is important to note that accounting profit does not include implicit costs (such as opportunity costs), as a result it is usually a bit higher than economic profit.

Leave a Reply

Your email address will not be published. Required fields are marked *

I agree that my data may be stored and used as stated in the privacy policy.