The Difference between Economic Profit and Accounting Profit

Based on my understanding, accounting profit is a measure of the profit or loss of the Company. It’s simply, total income minus total cost. I agree that accounting profit provides a good starting point to evaluate a company’s performance during a particular period. Many people tend to assume a company is doing well if it is profitable and invest in it as long as income statement shows net profit without considering other indicators such as accounting ratios and cash flows. However, I am unsure…

Mathematics in Economic Profit Maximization Introduction: Economics is a social science that deals with how individuals, governments, firms, and nations make decisions on allocating scarce resources to satisfy their unlimited wants. Economists use theories and mathematical models to provide solutions to many problems in decision making and forecasting in economics. I have decided to take a look at how math is used in the study of economics, specifically in economic models such as the profit maximization…

HOSPITALS AND LONG TERM CARE 2 For-Profit and Non-Profit Hospitals Introduction The difference between for-profit and non-profit hospital has been debated for a long time. The established of the two differentiates institutions of health has also had controversial twists concerning their societal role. For-profit hospitals are said to be after money more than service delivery, while non -profit are not. Both hospitals use their market power in a similar way that it is sometimes hard to differentiate…

the analysis of two articles of Stern Steward Research, namely “Accounting is Broken. Here’s How to fix it. A Radical Manifiesto” and “The capitalism Manifesto. The Transformation of the Corporation - Employee Capitalism –“. Both papers propose a roadmap to fix the conventional accounting shortness through the use of Value Based Management (VBM) as a real and effective management system of value creation and measurement. Economic Value Added (EVA) plays the main role in this management approach…

“The accounting profit figure is simply a measure of the true profit of an organisation.” Discuss. In order to assess whether the accounting profit is a measure of the true profit it must first be shown that there is such a thing as true profit. If we decide there is, we then need to know what it is exactly, in order to assess the extent to which the accounting profit reflects this true profit figure. Before studying this module I believed that the true profit was essentially the accounting…

Financial issue: differences and similarities between for-profit and not-for-profit accounting. While for profit organizations and not-for-profit organizations are different in many ways, even down to the core of how and why they conduct business and operate, there are also some similarities about them. Some similarities even go into their accounting uses and methods. Because they both do monetary transactions, they must have some similarities; however because they are very different, they also…

which is better: For-profit or not-for-profit hospitals? It has been a debate that for-profit hospitals are better than the not-for-profit hospitals since they can generate profit for expansions and is free from governmental policies in operations. These are, however, vague reasons and I will go deeper in putting forward my point. What are the differences between nonprofit and for-profit hospitals? Hospital authorities say there are just two noteworthy contrasts. Profit driven hospitals…

Accounting for Capital Projects and Debt Service ------------------------------------------------- Questions for Review and Discussion 1. Budgets, and hence budget comparisons, are not as essential for capital projects and debt service funds because they are often on a project, rather than an annual, basis and spending is typically authorized on that basis. 2. When bonds are issued for more than their par value, the premium can be interpreted as an adjustment of the interest…

Accounting systems for non-profits are designed to capture the organization’s financial position and its economic activities. Non-profit organizations use two methods of accounting; the cash method of accounting and the accrual method of accounting. The cash system records revenues when cash is received and records expenses when cash is paid. However, the cash method does not provide an accurate reflection of the economic condition of the not-for-profit organization (McCarthy, Shelmon, & Mattie,…

which is better: For-profit or not-for-profit hospitals? It has been a debate that for-profit hospitals are better than the not-for-profit hospitals since they can generate profit for expansions and is free from governmental policies in operations. These are, however, vague reasons and I will go deeper in putting forward my point. What are the differences between nonprofit and for-profit hospitals? Hospital authorities say there are just two noteworthy contrasts. Profit driven hospitals…