Accounting profit is calculated as total revenue minus explicit (out-of-pocket) cash expenses and non-cash accounting expenses such as depreciation and amortization: Accounting Profit = Total Revenue - (Explicit Costs + Depreciation). In contrast, economic profit deducts both explicit accounting costs and implicit opportunity costs of firm-owned resources.

Option analysis:

• Explicit costs only: Incomplete, depreciation is a standard non-cash accounting deduction from revenue.
• Explicit costs plus depreciation: Correct, standard accounting definition of total expenses deducted from revenue.
• Implicit costs only: Irrelevant to financial accounting statements.
• Explicit costs and implicit costs: Yields economic profit, not accounting profit.