Final answer:
The cost of Sally's $450 course is an explicit cost, which directly affects her business's accounting profit. When calculating economic profit, one must consider both explicit and implicit costs, such as potential foregone salary. In Sally's scenario, the course fee would deduct from her accounting profit but may be an investment for future earnings.
Step-by-step explanation:
The subject at hand relates to the field of Business, specifically within the area of accounting and business decisions. When considering the cost of continuing education courses for a self-employed CPA like Sally, we must understand the distinction between accounting profit and the broader financial implications, which include both explicit and implicit costs.
This involves understanding the terms like accounting profit, which is her earnings from her business after deducting only the explicit costs, such as direct expenses for running the business. For example, if Sally earned $115,000 as accounting profit, but had to leave a job where she was earning $125,000, the forgone salary would be an implicit cost connected to opportunity cost theory in economics. These implicit costs are important when calculating the economic profit, which in this scenario may actually be negative if the implicit costs exceed the accounting profit.
In Sally's case, the $450 fee for the tax course would be an explicit cost directly affecting her business's accounting profit. However, implicitly, if taking this course will enhance her reputation or enable her to earn more money in the future, then this education expense might also be considered an investment.