Which of the following should not be included when calculating accounting profit?
A)The cost of taxes.
B)The return on the next best alternative investment opportunity.
C)The cost of rent.
D)The cost of utilities.

Question

Quizplus · Accepted Answer

Accounting profit only considers explicit costs, which are actual expenses incurred by a firm such as the cost of rent and utilities. The return on the next best alternative investment opportunity is an implicit cost, which represents the foregone opportunity of choosing one investment over another. This should not be included in the calculation of accounting profit. The cost of taxes is an actual expense and should be included in the calculation of accounting profit.

Which of the Following Should Not Be Included When Calculating