Accounting profits are the most commonly used form of profits. According to Baye (2010), "Accounting profit is the total amount of money taken in from sales (total revenue, or price times quantity sold) minus the dollar cost of producing goods or services" (p. 5). Accountants report these profits to managers through their companies' income statements.

Baye, M. R. (2010). Managerial economics and business strategy (7th ed.). New York, NY: McGraw-Hill/Irwin.

Economic profits provide a widespread explanation for profits. Baye (2010) says that "economic profits are the difference between the total revenue and the total opportunity cost of producing the firm's goods or services" (p. 5). The opportunity cost part of this calculation includes any explicit or accounting costs related to the resource and also any implicit (or implied) costs related to abandoning an alternative resource.

Opportunity costs are usually greater than explicit costs alone because they include both explicit and implicit costs. Managers sometimes overlook implicit costs because they are easy to miss. Because of this, managers should use internal and external resources to keep track of them.

Baye, M. R. (2010). Managerial economics and business strategy (7th ed.). New York, NY: McGraw-Hill/Irwin.

The tuition students pay to take a course is an explicit (or accounting) cost, and the implicit (or implied) cost is the significance of what students sacrifice to take the course. For example, instead of taking this course, students could relax or take a different course; the alternative that has the greatest value represents the implicit cost. However, the opportunity cost of taking a course may be far greater than the tuition students pay or any other alternative activities.