Final answer:
A firm earns an accounting profit when its revenues exceed its explicit costs or expenses. For instance, if a firm's revenue is $1 million and expenses are $950,000, the accounting profit is $50,000. The correct definition is that a firm that earns more revenue than its expenses achieves accounting profit.
Step-by-step explanation:
A firm that earns an accounting profit is one that generates more revenue than its explicit costs or expenses. This is the basic definition of accounting profit. In other words, if a business brings in more money from its operation than it spends on labor, materials, and overhead expenses, it is said to have an accounting profit. For instance, if a firm's total revenue is $1 million and the total expenses including labor, capital, and materials amount to $950,000, then the firm's accounting profit would be the difference, which is $50,000.
Based on the provided options, the correct definition of a firm that earns an accounting profit is: A firm that earns more revenue than its expenses. This simple formula is crucial for all businesses as it determines the financial success of the firm's core activities without considering the opportunity costs (implicit costs).