Looking to calculate your accounting profit quickly and accurately? Our accounting profit calculator is here to help! Simply enter all input in the calculator.
What is accounting profit?
Accounting profit refers to the difference between total revenue earned and all explicit costs incurred by a business during a specific period. This type of profit calculation takes into account both cash and non-cash transactions, such as depreciation, taxes, interest, and operation expenses.
Accounting Profit Formula
To calculate accounting profit, you subtract explicit costs from total revenue:
Accounting Profit = Total Revenue – Explicit Costs
- AP = TR – TEC
- TEC = OE + I + D + T
- AP = Accounting Profit
- TR = Total Revenue
- TEC = Total explicit costs
- OE = Operation expenses
- I = Interest
- D = Depreciation
- T = Taxes
How to Calculate Accounting Profit?
Example:– Assume that a company earned $100,000 in revenue last year, and its expenses were $70,000. To calculate the company’s accounting profit, follow these steps:
- Total revenue: $100,000
- Total explicit cost: $70,000
- Subtract the explicit from the revenue to determine the accounting profit:
Accounting Profit = Total Revenue – Total Explicit Cost
Accounting Profit = $100,000 – $70,000 = $30,000
Therefore, the company’s accounting profit for the year was $30,000.
How to use an Accounting profit calculator
- First Enter the Total Revenue
- Enter Operation expenses and Interest Cost
- Enter total depreciation and taxes
- Then Click the Calculate button