Question
What is accounting profit?
Interesting Question? 
(1) 
(9)
(1) (9)
Answers (1)
4th Nov 2009 by Tom Lindmark
I've never specifically heard the term accounting profit before but I suspect it is an attempt to differentiate between cash flow and reported GAAP profits. Normally people talk about the difference between taxable profits and GAAP profits which can be quite substantial but that's a subject for a different post. At any rate, when one employs GAAP certain non-cash charges can reduce actual cash income. For instance depreciation requires no cash but it is an expense under GAAP. Accounting profit as you use the term might well be the net income that arises by employing GAAP and in that case it is going to be lower than the actual cash generated.
I've never specifically heard the term accounting profit before but I suspect it is an attempt to differentiate between cash flow and reported GAAP profits. Normally people talk about the difference between taxable profits and GAAP profits which can be quite substantial but that's a subject for a different post. At any rate, when one employs GAAP certain non-cash charges can reduce actual cash income. For instance depreciation requires no cash but it is an expense under GAAP. Accounting profit as you use the term might well be the net income that arises by employing GAAP and in that case it is going to be lower than the actual cash generated.
Like This Answer? (0) (0)
This answer is the subjective opinion of the writer and not of FinancialAdvisory.com
(0) (0)
28th Oct 2009 In Accounting
1 Answers | 82 Views
Subjects: accounting,
accounting profit,