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Implicit cost


bsai partish   11 August 2020

bsai partish

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according to economics implicit cost should not be recorded in the books of accounts.But why partners salary is included in p and l appropriation account?

avater

Asha Kanta Sharma (Manager - Finance & Accounts)     11 August 2020

Asha Kanta Sharma
Manager - Finance & Accounts 
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When partners wants Salary to be paid for their operations in the business then it is called EXPLICIT COST which must be recorded in business. 

Implicit cost only arrives when someone forgoes their Salary or interest or any other monetary benefits for long term benefit and success. 

Implicit costs are harder to measure than explicit ones, which makes implicit costs more subjective. Implicit costs help managers calculate overall economic profit, while explicit costs are used to calculate accounting profit and economic profit.

bsai partish   11 August 2020

bsai partish

 4 likes  107 points

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Tq sir


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