accounting profit

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The amount of profit calculated by using generally accepted accounting principles instead of tax rules. At its simplest the profit is the revenue for an accounting period less the expenses incurred, using the concept of accrual accounting. There are a number of theoretical and practical problems in arriving at the amount, for both revenue and expenses; the result is that the accounting profit has less precision than many believe. One of the consequences of this imprecision is that a number of organizations are tempted to present profits in their best light. Accounting standards attempt to prevent any abuses.

Subjects: Accounting.

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