This preview shows pages 1–2. Sign up to view the full content.
This preview has intentionally blurred sections. Sign up to view the full version.View Full Document
Unformatted text preview: earned renting the building. This implicit cost is not recognizable for accounting purposes but is useful for managers in determining how well the company is using capital to enhance profitability. Revenue $400,000 Less Expenses (explicit costs) - $300,000 Profit $100,000 Less Opportunity Cost (implicit cost) - $150,000 Economic (Loss) -$50,000 The opportunity cost of renting building led to an economic loss (despite an accounting profit) that is not recognizable for accounting purposes. Lloyd W W Bell, I. (n.d). Economic profit: An old concept gains new significance. The Journal of Business Strategy , 19 (5), 13. Retrieved from ProQuest: ABI/INFORM Complete database....
View Full Document
This note was uploaded on 07/15/2011 for the course ACC 541 taught by Professor Chrismoody during the Spring '11 term at University of Phoenix.
- Spring '11