The explicit costs, such as the legal expenses, associated with corporate default are classified as costs.
What do you mean by explicit cost?
Explicit costs are regular business expenses that are recorded in the general ledger of a firm and have a direct impact on its profitability. They have specific monetary values that are carried over to the income statement. Wages, leasing payments, utilities, raw materials, and other direct costs are a few examples of explicit costs.
Explicit costs, commonly referred to as "accounting costs," are simple to recognize and connect to the business operations of a corporation to which the expenses are allocated. They are entered into the general ledger of a business and pass on to the expenses shown on the income statement. A company's net income (NI) measures the residual money that is left over after all explicit costs have been covered.
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