accounting profit

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An accounting profit is the excess of business income over the business expenses. The business earns money after selling their goods or services. If the money they earn is more than the money they spend for making/providing the goods/services, it is said that the business has made an accounting profit. Accounting expenses don’t only include the tangible money that was spent by the business, but also includes any provision for losses or depreciation that the business makes over an accounting period. So once all these costs are reduced from the total income earned by a business enterprise, if the remaining amount is positive, it is an accounting profit.

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