As follows:
Accounting profit refers to the balance of the total income of an enterprise after deducting all explicit costs or accounting costs. Explicit cost refers to the actual expenditure incurred by an enterprise to obtain various production factors needed for production, mainly including wages paid to employees, various raw materials, spare parts and fuels purchased during production.
When profit is mentioned in economic analysis, it refers to the surplus of all income obtained by enterprises after deducting all opportunity costs of all production factors such as land, labor and capital.
Opportunity cost refers to the price of products or services produced by manufacturers. The hidden cost, that is, the opportunity cost caused by the long-term occupation of production factors by enterprises, is not considered in the calculation of accounting profits, which cannot be reflected in accounting records, but must be considered in economic analysis.
Accounting profit is accounted by financial accounting, and its confirmation, measurement and reporting are based on accounting standards and enterprise accounting system. The recognition of income strictly follows the accrual principle determined by the accounting system, and the recognition of costs and expenses strictly follows the principle of matching with income.
In order to make the financial statements of enterprises truly reflect the financial situation at the end of the period and the production and operation results during the period, enterprises can freely choose the accounting treatment methods allowed by accounting standards and accounting systems on the premise of following the principles of consistency and comparability. The difference between income and expense cost.