profit

(redirected from Accounting profit)
Also found in: Dictionary, Thesaurus, Legal, Encyclopedia.
Related to Accounting profit: Economic Profit

Profit

Revenue minus cost. The amount one makes on a transaction.

Profit

A company's total revenue less its operating expenses, interest paid, depreciation, and taxes. For example, suppose a widget manufacturer earns $1,000,000 in total revenue. The widgets cost $200,000 to make and his administrative and payroll expenses total $250,000. He also must subtract $50,000 in depreciation on his widget manufacturing equipment and pay $200,000 in taxes. His net income is stated as: $1,000,000 - $200,000 - $250,000 - $50,000 - $200,000 = $300,000.

profit

Profit.

Profit, which is also called net income or earnings, is the money a business has left after it pays its operating expenses, taxes, and other current bills.

When you invest, profit is the amount you make when you sell an asset for a higher price than you paid for it. For example, if you buy a stock at $20 a share and sell it at $30 a share, your profit is $10 a share minus sales commission and capital gains tax if any.

profit

the difference that arises when a firm's SALES REVENUE is greater than its total COSTS. GROSS PROFIT is the difference between SALES REVENUE and the COST OF SALES, while NET PROFIT is equal to gross profit less selling distribution, administration and financing costs. PROFIT AFTER TAX is the net profit attributable to shareholders after taxes have been paid.

Profit depends on two main factors:

  1. average profit margins or profit per £1 of sales. If costs increase the profit margins will be squeezed; if competition forces selling prices downward margins will be similarly squeezed, and vice versa;
  2. sales turnover. Any increase in sales value will tend to increase profits. See PROFIT AND LOSS ACCOUNT.

profit

the difference that arises when a firm's TOTAL REVENUE is greater than its TOTAL COSTS. This definition of‘economic profit’ differs from that used conventionally by businessmen (accountingprofit) in that accounting profit takes into account only explicit costs. Economic profit can be viewed in terms of:
  1. the return accruing to enterprise owners (entrepreneurs) after the payment of all EXPLICIT COSTS (payments such as wages to outside factor-input suppliers) and all IMPLICIT COSTS (payments for the use of factor inputs - capital, labour - supplied by the owners themselves);
  2. a residual return to the owner(s) of a firm (an individual ENTREPRENEUR or group of SHAREHOLDERS) for providing capital and for risk-bearing;
  3. the ‘reward’ to entrepreneurs for organizing productive activity, for innovating new products, etc., and for risk taking;
  4. the prime mover of a PRIVATE ENTERPRISE ECONOMY serving to allocate resources between competing end uses in line with consumer demands;
  5. in aggregate terms, a source of income and thus included as part of NATIONAL INCOME. See also PROFIT MAXIMIZATION, NORMAL PROFIT, ABOVE-NORMAL PROFIT, RISK AND UNCERTAINTY, NATIONAL INCOME ACCOUNTS.
References in periodicals archive ?
In addition to making conspicuous the pseudo profitability characteristics of accounting profits, EVA proves to be a lead indicator of the future prospects of the firms; the significant increase in proportion of firms eroding shareholders value despite no decline in proportion of profitable firms offers clear indication of imminent financial crisis.
BTC imposes a close relationship between accounting profit and taxable income.
The assumption being that the traditional accounting profit figure would not include this and that the figure would therefore be distorted and not a more realistic economic profit from which to judge efficiency of performance.
* development costs--They can be capitalized and amortized over future periods to determine accounting profit but deducted when determining taxable profit in the period they are incurred.
According to economic, financial and accounting theories and researches done three models are designed for predicting operational cash flow with three kinds of variables:1) accounting profit, 2) cash component and total accruals, 3)cash component and the accrual components of the accounting profit.
To further compare accounting profit to RMEI and EMEI, average historical accounting profits were estimated using the NPI and MVS databases.
Similarly, the social contribution on net income--CSLL is due on a basis of calculation as of the accounting profit, to which additions and exclusions are made, as determined and allowed by the legislation.
The traditional CVP model is developed by specifying the mathematical relationship between a product's accounting profit and its sales quantity, price, and costs.
PCAOB isn't perfect and, in fact, perpetuates the current accounting education model's focus on Generally Accepted Accounting Principles (GAAP) and accounting profit rather than economic realities tied to return on assets and cash flow.
RELATED ARTICLE; ACCOUNTING REFORM: Concepts For Moving From Accounting Profit To Economic Profit
Wanadoo said that revenues from the sale would "partially compensate for investments relative to MyWeb made in 2001, translating into an accounting profit for Macintosh Retail Group in 2002"...JJ:(PhD/AFP)

Full browser ?