Question

Gross profit is calculated as the difference between net sales revenue and ________.

A) purchase expense
B) cost of goods sold
C) cost of merchandise inventory
D) operating expenses

Answer 1

Gross profit is calculated by subtracting the cost of goods sold (COGS) from net sales revenue. It is a measure used in accounting to assess the profitability of a company's sales operations.

Step-by-step explanation:

Gross profit is calculated as the difference between net sales revenue and cost of goods sold (COGS). The formula for gross profit is: Gross Profit = Net Sales - COGS. This means from the provided options, the correct one is B) cost of goods sold. Gross profit focuses on the relationship between the revenue obtained from selling goods and services and the direct costs associated with producing those goods and services, which is captured in COGS. It is a key indicator used in accounting to assess the financial health of a business's sales operations.