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SCARCE RESOURCE: A resource with an available quantity less than its desired use. Scarce resources are also called factors of production. Scarce goods are also termed economic goods. Scarce resources are used to produce scarce goods. Like the more general society-wide condition of scarcity, a given resource is scarce because it has a limited availability in combination with a greater (potentially unlimited) productive use. It's both of these that make it scarce. In other words, even though an item is quite limited it will not be a scarce resource if it has few if any uses (think pocket lint and free good).

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CORPORATE PROFITS:

The total accounting profits received by corporations. Corporate profits are the official item in the National Income and Product Accounts maintained by the Bureau of Economics Analysis that measures profit earned by the household sector for supplying entrepreneurship services through corporations, and to some degree capital and land services, too. This is one of five official factor payments making up national income. The other four are compensation of employees, rental income of persons, net interest, and proprietors' income. Corporate profits the second largest factor payment category, usually coming in around 20 to 25 percent of national income.
As accounting profits, corporate profits are the difference between total revenue and total explicit accounting costs, and they may or may not correspond closely to economic profit. Corporate profits are separated into three categories: (1) retained earnings (undistributed corporate profits), (2) dividends (distributed corporate profits), and (3) taxes (corporate profits taxes or corporate profit taxes). Dividends, the proportion paid to the household sector, is usually about one-third of corporate profits, give or take a few billion dollars.

Somewhere in the deep recesses in the history of the development of the National Income and Product Accounts, someone likely surmised that corporate profits were an appropriate way to measure the services of entrepreneurship. And without question, a portion of corporate profits compensates entrepreneurs for their risk-taking and organizational activities. However, a sizeable portion of corporate profits compensates shareholders for their ownership of capital and land, as well.

While some of the capital, land, and natural resources used by corporations are compensated with interest payments on borrowed funds, rent and royalty payments, a fair amount of compensation for these resources are in the form of corporate profits.

Because a portion of corporate profits is payment for the use of capital goods, it receives a capital consumption adjustment before being included as national income. The capital consumption adjustment is part of gross domestic product, but not part of national income. As such, any depreciation of the capital used by corporations is deducted before calculating the corporate profits.

<= CONTRIBUTIVE STANDARDCORPORATE PROFITS DISTRIBUTION =>


Recommended Citation:

CORPORATE PROFITS, AmosWEB Encyclonomic WEB*pedia, http://www.AmosWEB.com, AmosWEB LLC, 2000-2019. [Accessed: February 22, 2019].


Check Out These Related Terms...

     | factor payments | compensation of employees | net interest | rental income of persons | proprietors' income | gross domestic income | personal income | disposable income | net domestic product |


Or For A Little Background...

     | national income | gross domestic product | gross domestic product, income | production | resource markets | National Income and Product Accounts | Bureau of Economic Analysis | National Bureau of Economic Research |


And For Further Study...

     | personal income and national income | disposable income and personal income | gross domestic product, expenditures | gross domestic product, ins and outs | gross domestic product, welfare | gross national product | real gross domestic product | business cycles | circular flow | national income and gross domestic product | national income and net domestic product |


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     | Bureau of Economic Analysis |


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