Final answer:
A firm's accounting performance is assessed through accounting profit, which includes explicit costs and is used to measure competitive advantage. Economic profit differs by including implicit costs, impacting the firm's economic success beyond just accounting profit.
Step-by-step explanation:
A firm's accounting performance is a measure of its competitive advantage calculated using information from a firm's published profit and loss and balance sheet statements. Privately owned firms are motivated to earn profits, defined as the difference between revenues and costs. Accounting profit only takes into account explicit costs, which means the actual money transactions in terms of dollars brought in and dollars paid out. In contrast, economic profit includes both explicit and implicit costs, considering the total cost and not just cash transactions. This distinction is crucial because it affects a firm's economic success which isn’t solely based on its accounting profit.