Types of Profit
In Nigeria, a typical market woman sells her goods for lets say #500,000, while she purchased the raw materials for #300,000. To her, she has made a profit of #200,000. Without the knowledge of management accounting, she does not know about the concept of contribution, accounting profit, economic profit and normal profit, fixed costs and variable costs.
I am writing this post specifically to discuss the concept of accounting profit, economic profit and normal profit. So to kick start the discussion let us take a look at what accounting profit is. [Read more…]