--%>

Define the difference between accounting and economic cost

Define the difference between accounting and economic cost.

E

Expert

Verified

Difference in between Accounting Cost and Economic Cost are as follows:

Accounting cost implies the expenses incurred through the firm on production and sale of service or goods. Such are paid by the firm to the outsiders. For illustration, payment made for wages as raw materials, power, fuel and building and so forth are the accounting costs. For contractual payments accounting cost is the money paid. This includes payments and charges made through the enterprise to the suppliers of resources. This is the explicit cost.

But economic cost contains not only explicit cost but also imputed or implicit cost. Implicit cost contains rent charged upon owned premises, wages paid to entrepreneur and interest charged on owned capital. Implicit cost is not comprised in accounting cost. Accounting cost contains only explicit costs that are recorded inside the books of account. Implicit cost will not be recorded in the books of account. Therefore the economist’s concept of cost is more comprehensive like compared to accountant’s concept of cost.

   Related Questions in Managerial Economics

  • Q : Average Benefits in Human Capital and

    Throughout the past 50 years in the United States, there the average gains in lifetime income related along with having a college degree in addition to a high school diploma have: (1) declined since the larger proportion of the population that is college educated has

  • Q : Explain the reasons for demand curve

    Explain the reasons for demand curve slopes downward.

  • Q : Part of the payment in economic rent

    Economic rent shows part of the payment for the utilization of: (w) landowners’ labor and capital to keep their land. (x) landowners’ buildings and equipment. (y) resources for that supplies are less than perfectly elastic. (z) any piece o

  • Q : Illustrates the term monetary policy

    Illustrates the term monetary policy?

  • Q : Diminishing returns imply economic

    This is not true that the law of diminishing returns which it: (i) Consists applications in numerous areas outside economics. (ii) Is encountered in many ways in economics. (iii) Implies that continually increasing production ultimately entails increa

  • Q : Competitive Labor Markets Need

    Competitive equilibria in competitive labor markets need: (w) P = MR = AVC. (x) VMP - P is maximized. (y) VMP = MRP = MFC = w. (z) output is at a break-even level. (q) MPP = P. Can anybody suggest me the proper exp

  • Q : Tutorial 7. The San Diego Zoo is

    7. The San Diego Zoo is contemplating a stuffed panda bear advertising promotion. Annualized sales data from local shops marketing the "Can't Bear it When You're Away" bear indicate that: Q = 50,000 - 1,000P where Q is Panda bear sales and P is price. A. How many pandas could the zoo sell at $30

  • Q : Supplies of Labor within Competitive

    During a competitive resource market, every firm confronts a resource supply curve which is: (w) upwardly sloped. (x) backward bending. (y) perfectly inelastic. (z) perfectly elastic. I need a good

  • Q : Factors governing prices and pricing

    Illustrates the factors governing prices and pricing decision in briefly?

  • Q : Maximize utility in competitive

    Within the competitive resource market model, all households are assumed to sell the employ of resources in attempts to maximize: (w) income. (x) utility. (y) employment. (z) social welfare. I need a good answer on