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Accounting Profit Calculator

LAST UPDATE: August 25th, 2018

Calculator

What is accounting profit?

Accounting profit is a method of calculating profit using explicit costs (where money changes hands).

For example, if a building is purchased for $100,000, and the next year would be worth $200,000 (but not sold) there is no increase in profit as there is no explicit transaction.

Accounting profit is typically used for tax calculations.

Formula

Accounting Profit = Revenue – Explicit Costs

Example

A business has revenue of $500,000 and explicit costs of $300,000

Accounting Profit = $500,000 – $300,000 = $200,000

Therefore, the accounting profit is $200,000.

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