Accounting profit can be defined as:

The appropriate definition of accounting profit is the total revenue generated minus all explicit costs. This concept clarifies that accounting profit is focused on the monetary expenditures that a firm faces, which includes direct costs such as wages, rent, and materials. In this context, explicit costs are cash outflows that are easily identifiable and quantifiable.

Economic profit extends beyond this notion and incorporates implicit costs, which represent the opportunity costs of the next best alternative foregone. The incorrect choice suggests that accounting profit is linked with economic profit in the manner presented, but in reality, these two terms represent different concepts within the domain of financial and economic analysis.

Understanding this clarification is crucial as it differentiates how profit can be measured in various contexts, emphasizing the straightforward calculation of accounting profit versus the more comprehensive nature of economic profit, which accounts for both explicit and implicit costs.