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Accounting profit is equal to the total revenue minus the total explicit cost, explicit costs are payments made to outside firms such as for rent, wages, and utilities. In accounting profit, implicit costs are not considered and are therefore not used to make business decisions.

Economic profit is where revenue is subtracted from the total opportunity cost which is explicit and implicit costs added together. Implicit costs are the opportunity cost of forgone resources used for the current product. This includes wages the business owner may have given up to own a business.

When a company makes zero accounting profit it means that the explicit costs are equal to the revenue. Accounting profit can overstate profit so, in reality, the company could be in negative economic profit but positive accounting profit.

When a company makes zero economic profit it is defined as normal profit, which is the minimum profit necessary to keep the firm in operation. What this means is that the firm would not benefit from reallocating resources and is earning as much as the opportunity that was forgone.