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Why would an accountant say a firm is making a profit and an economist say it is losing money?
Wiki User
∙ 12y ago
Economists always include both implicit and explicit costs in the calculation of their profits while Accountants only cater for explicit costs when calculating profits.So due to the inclusion of opportunity costs, which can be termed implicit costs, economists' profits will always be lower than accountants' profits.Hence an accountant may say they are making profits while it is different from an economist's view.
Wiki User
∙ 12y ago
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Is profit making the primary goal of any business enterprise and why?
Yes, profit making is the primary goal of business. It is the reason businesses exist. If they don't make a profit, they will not survive.
What is zero economic profit?
Stagnation or zero growth as long as they aren't losing money.
If competitive industry Z is making substantial economic profit output will?
if competative industry z is making substantial economic profit, output will:
What is disinvestment of profit making?
When firms are making no or little profit, there is incentive to innovate/invest because they wish to increase profits in the future. When profit is already achieved, there is less incentive (disincentive) to do so.
Will economic profit exceed accounting profit?
Economic profit will never exceed accounting profit. The accountant will calculate total cost using only explicit costs (basically a transfer of money) that the firm makes. On the other hand, economists will factor in opportunity cost as well. For example, if a person takes their life's savings and invests it in a new company, the interest that the money could be making will be an opportunity cost for the firm, as well as the salary they could be earning at a different firm. This all means that economists will calculate higher costs, which means that economic profit is lower than accounting profit.
What are the ways which a management accountant might contribute to a formal decision making process?
A management accountant might contribute to a formal decision making process by ordering feasibility studies. A management accountant can also tell everyone how much things will cost and how much profit can be made.
Why is profit requirement of business?
If a business is not making a profit then they are losing money if this continues a business will reach a point in which it will have no money and declare bankruptcy.
What is the difference between profit making accounting and not for profit making accounting?
The difference between profit making accounting and not for profit making accounting is, that question should answer itself! 8^0
What is Profit-making companies?
A profit making organisation is an organisation which its priority is to make a profit rather than to help the community.
What is the meaning of the idiomatic expression 'in the black'?
In business, making a profit; not losing money.that there is profit or cash on hand. having enough to pay what one owes, with extra left over. "in the red" means in debt.have money in the bank. As opposed to being in the red, is to be in debt
What is the opposite of profit?
unprofitable
Is the trading of shares Halal?
Absolutely. Trading of shares involves the risk of losing money as well as gaining profit and the person needs to do extensive research in making investments in the stockmarket. Thus the profit gained from stock exchange is purely Halal (unlike the interest from banks)
How can i own a target store?
I don't believe they franchise, but why would you want to-they are losing money to walmart and amazon. before you invest your life savings in a store-try to find one making a profit.
What is profit oriented organization?
Non profit making organization is the type that does not deal with profit oriented
What is the full form of apple computer?
Arrogance Produce Profit-Losing Entity
Can you differentiate between profit and non-profit making business?
any business u making money more than your expenses thas is profit otherwise loss
What is the meaning of close the Profit and Loss Summary account?
profit is when the company is making money and a loss is the company is not making money.
