opportunity cost

mashfaq · 03-11-2011, 04:50 PM

Why opportunity cost is not recognized while calculating the accounting profit? I need some logical reasons ( In the light of accounting standards or applications) . I also know that it is the implicit cost

moniacca · 04-05-2011, 03:43 PM

<blockquote id="quote">quote<hr height="1" noshade id="quote">Originally posted by mashfaq
 Why opportunity cost is not recognized while calculating the accounting profit? I need some logical reasons ( In the light of accounting standards or applications) . I also know that it is the implicit cost
<hr height="1" noshade id="quote"></blockquote id="quote">

Financial statements are prepared on accrual basis. Opportunity cost is not the cost that is actually incured and/or does not relates to the period for which financial statements are prepared. So opportunity costs are not recognized while calculating the accounitng profits.

I hope my reply will help you.

Comments are appreciated.

imdad1 · 04-05-2011, 03:47 PM

Agreed with the above answer!!!
Oppourtunity cost is computed for decision making.....

thats y financial manangement and financial accouting are two different areas!! )

<blockquote id="quote">quote<hr height="1" noshade id="quote">Originally posted by moniacca
 <blockquote id="quote">quote<hr height="1" noshade id="quote">Originally posted by mashfaq
 Why opportunity cost is not recognized while calculating the accounting profit? I need some logical reasons ( In the light of accounting standards or applications) . I also know that it is the implicit cost
<hr height="1" noshade id="quote"></blockquote id="quote">

Financial statements are prepared on accrual basis. Opportunity cost is not the cost that is actually incured and/or does not relates to the period for which financial statements are prepared. So opportunity costs are not recognized while calculating the accounitng profits.

I hope my reply will help you.

Comments are appreciated.
<hr height="1" noshade id="quote"></blockquote id="quote">

basit_namdar · 04-05-2011, 05:47 PM

Ok its like something that u have the offer to work in company A for 10,000 Rs but you are currently employed in company B at 6000 Rs. So according to management accounting the benefit from switching job will be 4000. But will you be earning 4000 or 10000?? In F/S we record the whole of income not the extra benefit earned after undergoing some work. As explained above.

razaarif123 · 04-08-2011, 10:45 PM

accounts are managed to disclose real financial tranactions!!!