implicit cost means?
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What Is an Implicit Cost?
An implicit cost is any cost that has already occurred but not necessarily shown or reported as a separate expense. It represents an opportunity cost that arises when a company uses internal resources toward a project without any explicit compensation for the utilization of resources. This means when a company allocates its resources, it always forgoes the ability to earn money off the use of the resources elsewhere, so there's no exchange of cash. Put simply, an implicit cost comes from the use of an asset, rather than renting or buying it.
KEY TAKEAWAYS
An implicit cost is a cost that exists without the exchange of cash and is not recorded for accounting purposes.
Implicit costs represent the loss of income but do not represent a loss of profit.
These costs are in contrast to explicit costs, which represent money exchanged or the use of tangible resources by a company.
Examples of implicit costs include a small business owner who may forgo a salary in the early stages of operations to increase revenue.