Which of the following should not be included when calculating accounting profit?
A)The cost of taxes.
B)The return on inventory investment.
C)The cost of rent.

Question

Quizplus · Accepted Answer

Accounting profit is the revenue earned minus the explicit, or direct, costs incurred in generating that revenue. The cost of taxes and the cost of rent are both explicit costs and should be included in the calculation of accounting profit. However, the return on inventory investment is an implicit cost, which refers to the opportunity cost of tying up funds in inventory instead of investing them elsewhere. Implicit costs are not included in the calculation of accounting profit.

Which of the Following Should Not Be Included When Calculating