Final answer:
Revenue is the total income earned from providing services or selling goods before expenses, while profit is what remains after all costs are subtracted from revenue. Accounting profit considers explicit costs and is calculated by subtracting these from total revenues. Gross margin, amortization, and other financial terms, though related, have distinct meanings.
Step-by-step explanation:
Revenue is the money a company earns from providing services or selling goods to customers. It's important to distinguish between different financial terms. While profit is the net income after subtracting all costs from the revenue, and gross margin refers to the difference between revenue and cost of goods sold, amortization deals with spreading an intangible asset's cost over its useful life. To accurately calculate profit, you take the total revenue and subtract the total cost.
Total revenue is generally calculated as the price per product multiplied by the quantity sold. It is the starting point for calculating a business's profit. For example, if a business earns $1,000,000 in revenue from selling its products and its total explicit costs are $600,000 for manufacturing, $150,000 for marketing, and $200,000 for administrative expenses, the accounting profit would be $50,000.An in-depth understanding of these terms is crucial for anyone studying business, as they form the foundation of a company's financial performance.