What is the term used for the profit on a sale before any operating expenses have been deducted?
Find the correct option that indicates the correct term for the given explanation.
The correct answer is option (c).
Gross profit: Gross profit is the amount of revenue earned from goods sold over the costs incurred for the goods sold.
Formula to compute gross profit:
Justification for correct answer: Gross profit is the difference between net sales and cost of goods sold. The amount of cost of merchandise sold during a certain period is referred to as cost of goods sold. Cost of goods sold does not include any operating expenses. So, gross profit is the revenue generated from sales over the cost of goods sold, before any operating expenses are incurred. Hence, option (c) is correct.
Justification for incorrect answers:
Therefore, option (c) is correct answer.
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