--%>

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 : Illustrates the Income Elasticity of

    Illustrates the Income Elasticity of Demand?

  • Q : More productive firm for labor Workers

    Workers who keep their jobs will be more productive after firms adjust to raises in: (1) competition in an industry. (2) wages. (3) technological advances. (4) capital costs. (5) government regulation. Hey friends please give your

  • Q : Increases in demand for a resource The

    The demand for a resource would increase while the: (w) price of which resource decreases. (x) price of a substitute resource decreases. (y) consumer demand for products decreases. (z) price of a complementary resource decreases.

  • Q : Specific Training by Human Capital A

    A firm which provides its workers along with substantial exact training tends to: (i) pay such individuals premium wages to try to make sure retaining these workers. (ii) require workers to sign legal contracts of peonage and indenture. (iii) increase

  • Q : Describe the term trend projection

    Describe the term trend projection.

  • Q : What are the main features of

    What are the main features of managerial economics?

  • Q : Illustrate Screening by Asymmetric

    Insistence by a potential employer which job applicants submit a résumé is an illustration of: (1) networking. (2) screening. (3) signaling. (4) bragging. (5) qualifying. Please choose the right answer from above...I

  • Q : Average wages for workers Average

    Average female wages are historically beneath the average for male workers due to: (w) concentration in low income occupations. (x) placement in low status job positions. (y) lower admission in professional schools and skilled trades.

  • 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 : Welfare definition of economics Explain

    Explain the welfare definition of economics? Why is it criticized?