What is the term for revenue left after subtracting the cost of products sold from net sales?

What is the term for revenue left after subtracting the cost of products sold from net sales?

• A. Net Income
• B. Revenue
• C. Operating Income
• D. Gross Profit

Answer: (D)

Gross profit is the money left after you subtract the direct costs of producing the goods from net sales. Net sales reflect what you actually earned from selling products (after returns and allowances), while cost of goods sold covers materials and labor directly tied to making those products. So gross profit equals net sales minus cost of goods sold. This shows how efficiently you’re producing and pricing your core products before accounting for other expenses like selling, general, and administrative costs, as well as interest and taxes. It’s different from revenue (the total inflow before costs), operating income (gross profit minus operating expenses), and net income (all expenses subtracted). For example, if net sales are 100 and COGS are 60, gross profit is 40.

Gross profit is the money left after you subtract the direct costs of producing the goods from net sales. Net sales reflect what you actually earned from selling products (after returns and allowances), while cost of goods sold covers materials and labor directly tied to making those products. So gross profit equals net sales minus cost of goods sold. This shows how efficiently you’re producing and pricing your core products before accounting for other expenses like selling, general, and administrative costs, as well as interest and taxes. It’s different from revenue (the total inflow before costs), operating income (gross profit minus operating expenses), and net income (all expenses subtracted). For example, if net sales are 100 and COGS are 60, gross profit is 40.