Which of the following statements is true regarding the differences between economic and accounting costs?

A) Accounting costs include all implicit and explicit costs.
B) Economic costs include implied costs only.
C) Accountants consider only implicit costs when calculating costs.
D) Accounting costs include only explicit costs.

Economic Costs

The total cost of choosing one action over another, including both explicit costs and opportunity costs.

Accounting Costs

Costs that are recognized in the financial statements and involve actual cash flow, such as salaries, rent, and materials.

Implicit Costs

Costs that are not directly paid out or incurred in money but represent the opportunity cost of using resources owned by the firm for its own production instead of renting them out or selling.