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The Concept of Profit in Accounting and Economics

In general, the term ‚profit’ stands for the difference between revenue and costs. However, for one and the  same activity, profit does not necessarily have to be the same number under different points of view. Different accounting standards (like US GAAP and IAS) or special regulations for taxation make organizations display different profits in financial statements for different purposes.

On top of that, profit from the accountant’s point of view is not equal to profit from the economists point of view. This difference is not based in different principles on what to evaluate how, but in fundamentally different understandings of costs and profits.

This article will describe the differences of profit in accounting and economics without discussing details of cost theory.

Please find an updated and extended version of this article at


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Status: 01. Juli 2015