Probe - Accounting, Auditing and Taxation

The Development Trend of Accounting Costs from the Perspective of Economic Costs

Mengfan Xu

School of Accounting and Finance, Xi’an Peihua University

Di Wang

School of Accounting and Finance, Xi’an Peihua University

DOI: https://doi.org/10.59429/paat.v6i3.7101

Keywords: Economic cost; Accounting costs; Opportunity cost; Cost accounting; Enterprise decision-making

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Abstract

This paper explores the differences between economic costs and accounting costs, as well as their impact on business decision-making. Among them, economic costs cover both explicit and implicit costs, emphasizing opportunity costs and optimal allocation of resources, and accounting principles focus on all potential benefits and losses; Accounting costs focus on actual expenses incurred, emphasizing authenticity and comparability, and are classified into direct costs, indirect costs, etc. There are significant differences between the two in terms of cost recognition and measurement, as well as their impact on business decisionmaking. Economic costs can provide a macro perspective on decision-making, while accounting costs are more commonly used for short-term financial management. Understanding the differences between these two costs is beneficial for businesses to optimize decision-making and improve resource allocation efficiency.

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