• Accounting profit shows the amount of money left after deducting the explicit costs of doing business.

  • Explicit costs include labor, inventory, and raw materials, as well as transportation, production, sales, and marketing costs.
  • Accounting profit differs from economic profit because it is only the cash costs that the firm pays and the cash income it receives.
  • Accounting income also differs from basic income, which aims to eliminate the impact of non-recurring items.