Accounting Profit
Plain definition
Total revenue minus explicit (out-of-pocket) costs — the profit figure shown in financial statements.
In economics
Accounting profit = TR − explicit costs. It is what tax authorities and shareholders see, and it is always at least as large as economic profit, because it ignores implicit opportunity costs. A positive accounting profit does not guarantee the business is the owner's best use of time and capital.
Example
A shop with 220,000 in explicit costs earns $80,000 in accounting profit.
Accounting profit is confused with economic profit. Accounting profit counts only cash expenses; economic profit also subtracts implicit costs. A firm can report a healthy accounting profit yet be earning zero economic profit — meaning the owner would do just as well in the next-best alternative.