Economic profit and accounting profit of CMA knowledge point
Opportunity cost: when one scheme is selected and other schemes are abandoned, the related benefits of the abandoned scheme. The opportunity cost of cash outflow is called explicit cost, sometimes called accounting cost. The opportunity cost without cash outflow is called hidden cost. Accounting profit focuses on the assumption of accounting period, and the income and expenses in the income statement are recognized according to the accrual basis principle, and should follow the generally accepted accounting principles (GAAP).
Accounting profit = total income-explicit cost (accounting cost) Economic profit focuses on going concern and refers to the net present value of the company's profit in its life cycle;
Economic profit = total income-explicit cost (accounting cost)-implicit cost
Case analysis of economic profit and accounting profit
The key difference between accounting profit and economic profit lies in economic profit:
First, the concept of historical cost is prominent.
B, use the economic order quantity model to calculate the change of supply.
Excluding income tax and interest expenses.
D. consider the opportunity cost of equity.
Answer: D Analysis: The essential difference between economic profit and accounting profit is that economic profit considers the opportunity cost of implicit equity funds, while accounting profit only considers the explicit cost. Economic profit = earnings before interest and tax-(long-term liabilities+shareholders' equity) × weighted average cost of capital (WACC), in which: earnings before interest and tax = earnings before interest and tax-income tax (without deducting interest), and the weighted average cost of capital is the capital cost of long-term liabilities and shareholders' equity multiplied by their respective capital costs.
The financial information of company S in the last year is as follows: current assets of US$ 500,000, fixed assets of US$ 250,000, current liabilities of US$ 65,438+000,000, long-term liabilities of US$ 300,000, owners' equity of US$ 350,000, operating profit of US$ 65,438+000,000 and income tax of 438a.
Answer a profit before interest and tax = 1 000,000-400,000 = 600,000 EVA = 600,000-(300,000+350,000) ×10% = 535,000.