Final answer:
Cost and management accounting complement financial accounting and help in making internal decisions. Accounting profit and economic profit are different measures of profitability, with the latter including both explicit and implicit costs. Breaking down total costs helps firms gain important insights for financial management.
Step-by-step explanation:
The question relates to the differences between cost and management accounting and financial accounting, as well as the concepts of accounting profit and economic profit. Cost and management accounting do not require entirely separate accounts than what is used in financial accounting, as they provide product or service cost information that's also used for internal decision making. Both accounting profit and economic profit are measures of profit for a business, but they differ in how they are calculated. Accounting profit is the total revenue minus explicit costs, which are the direct costs of doing business. Economic profit, on the other hand, considers both explicit costs and implicit costs (such as opportunity costs), providing a more comprehensive view of a firm's profitability.
Understanding these different costs is essential for decision-making in business. Breaking down total costs into categories such as fixed cost, marginal cost, average total cost, and average variable cost is useful for firms to gain insights into their financial operations. In summary, both cost management and understanding profit concepts are crucial for the successful financial management of a firm.