Accounting Costs

Accounting costs refer to the actual, recorded expenses a business incurs while operating. These costs include expenses such as rent, salaries, utility bills, raw materials, and other operating costs that are directly documented in the financial statements. They help businesses determine profitability and manage finances. Unlike economic costs, which also consider opportunity costs (the value of alternatives foregone), accounting costs focus solely on tangible expenses. Understanding accounting costs is crucial for assessing a company’s financial health and making informed business decisions.