Accounting Profit Calculator
Calculate business accounting profit by subtracting explicit costs from total revenue
Calculate Accounting Profit
Total income from sales (price × quantity sold)
Wages, inventory, sales & marketing costs
Interest paid on loans and investments
Reduction in asset value over time
Corporate tax and other tax obligations
Accounting Profit Results
Profit Margin
Accounting profit as percentage of revenue
Cost Breakdown
Formula: Accounting Profit = Total Revenue - Total Explicit Costs
Calculation: $0.00 - $0.00 = $0.00
Example Calculation
Small Pizzeria Business Example
Annual Revenue: $100,000 (pizza sales)
Operation Expenses: $25,000 (wages, ingredients, utilities)
Interest: $12,000 (loan payments for equipment)
Depreciation: $10,000 (equipment depreciation)
Taxes: $15,000 (corporate and other taxes)
Calculation
Total Explicit Costs = $25,000 + $12,000 + $10,000 + $15,000 = $62,000
Accounting Profit = $100,000 - $62,000 = $38,000
Profit Margin = ($38,000 ÷ $100,000) × 100% = 38%
Accounting vs Economic Profit
Accounting Profit
Revenue minus explicit costs only
What appears on financial statements
Economic Profit
Revenue minus explicit AND implicit costs
Includes opportunity costs
Explicit Cost Components
Operation Expenses
Wages, rent, utilities, inventory
Interest
Loan payments, credit interest
Depreciation
Asset value reduction over time
Taxes
Corporate tax, sales tax
Financial Tips
Positive accounting profit indicates financial health
Track profit margins to measure efficiency
Consider opportunity costs for complete analysis
Regular profit calculation helps business planning
Understanding Accounting Profit
What is Accounting Profit?
Accounting profit, also known as bookkeeping profit or financial profit, is the net income earned after deducting all explicit costs from total revenue. It represents the amount of money a firm has left over after paying all the direct, out-of-pocket costs of running the business.
Why is it Important?
- •Shows business financial performance on income statements
- •Helps investors evaluate company profitability
- •Required for tax reporting and regulatory compliance
- •Essential for business planning and decision making
Formula Breakdown
Accounting Profit = Total Revenue - Total Explicit Costs
Total Explicit Costs = Operation Expenses + Interest + Depreciation + Taxes
- Total Revenue: Income from sales (price × quantity)
- Operation Expenses: Wages, rent, materials, utilities
- Interest: Cost of borrowed capital
- Depreciation: Asset value decline over time
- Taxes: Corporate and other business taxes
Note: Accounting profit does not include implicit costs (opportunity costs) which are considered in economic profit calculations.
Real-World Applications
📊 Financial Reporting
Used in income statements, annual reports, and financial disclosures to stakeholders
💼 Investment Decisions
Investors analyze accounting profit to evaluate company performance and growth potential
🎯 Business Planning
Helps managers make strategic decisions about operations, pricing, and expansion