CFA Practice Question

There are 539 practice questions for this study session.

CFA Practice Question

The difference between economic profit and accounting profit is equal to ______.
A. implicit and explicit costs
B. implicit and explicit revenues
C. implicit revenues minus implicit costs
Explanation: Economic profit includes all revenues and costs, even those that are difficult to measure, while accounting profit includes only revenues and costs that are readily observable.

User Contributed Comments 6

User Comment
cbb1 What are implicit revenues?
Peter I guess it can be a free lunch if you work in a canteen?
surob Normal profit, your salary if you worked somewhere
Mariecfa Implicit Revenues: ("psychic") revenues; for example, a person may particularly enjoy "being his own boss".
Mariecfa Example of an implicit revenue: The store owner particularly enjoys socializing with the customers; this aspect of the business provides a comfort to the owner which is worth $2,000 a month to her.
jaker Kind of like intangibles?
You need to log in first to add your comment.