Final answer:
A corporation must keep an Accumulated Earnings and Profits (E&P) account to track earnings and profits efficiently, considering both explicit and implicit costs to understand their actual profitability.
Step-by-step explanation:
To properly track earnings and profits, a corporation must keep an Accumulated Earnings and Profits (E&P) account. This account is vital for a business to have a clear understanding of its profit-making capabilities over time. Privately owned firms pursue profits, which are the result of subtracting costs from revenues.
It's worth noting that an accounting profit includes only the explicit, or actual, costs, such as raw materials and payroll, while an economic profit also takes into consideration the implicit costs or opportunity costs of decisions, like the income a business foregoes by choosing one investment over another.