Difference between economic and accounting profit.

Probably, every person understands the term "profit" - this is the benefit that a company or individual entrepreneur receives after carrying out its activities. But not everyone knows that profit can be both accounting and economic. What are the differences between these two concepts? Let's try to find the distinctive features of these economic terms.

Accounting profit represents the benefit the company has received and is calculated by subtracting all official costs from the total revenue. In other words, it is the difference between legal income and expenses. Proceeds can be obtained from the sale of manufactured products, performance of various types of work or the provision of services to their counterparties. As for expenses, there can be quite a lot of them, since this includes salaries of employees, and rent, and utility bills, and taxes, and the purchase of office equipment, as well as the cost of research and development. The difference between the income and expenditure parts of the enterprise's budget is precisely the accounting profit, which can subsequently be spent on the payment of dividends or made as an investment in production.

Economic profit is the result of a deduction between all income and expenses of the enterprise, therefore it reflects the real state of affairs at the enterprise, that is, whether it is functioning successfully or is in a crisis situation... As income, not only the official revenue of the company is used here, but also other sources of cash receipts that are not officially reflected in the accounting records. In this case, expenses should include not only those expenses that were made officially with documentary evidence, but also those that are not official, but, nevertheless, may be present at the enterprise. In addition, economists also classify lost profits as expenses, that is, income that could have been received under certain circumstances, but were not acquired for one reason or another. Also, expenses may be recognized as additional bonus payments to employees or some kind of entertainment expenses that are not accounted for in accounting.

The difference between accounting and economic profit lies in the method of their calculation, in which certain income and expenses may or may not be taken into account. So, accounting profit is determined only on the basis of documentary evidence of income and expenses, since only in this way can they be officially certified by the regulatory authorities. Economic profit does not focus on papers, but takes into account the specifics of doing business, considers the issues of missing out on any benefit or spending money without official registration.

Conclusions TheDifference.ru

  1. Accounting profit is based on income and expenses, formalized and confirmed by various documents, and economic profit, on the contrary, is not always based on documents;
  2. Accountants calculate profits based solely on fait accompli, while economists determine profits taking into account all transactions - whether or not that has occurred.
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