What is Gross profit in Financial Accounting?

Q: What is Gross profit in Financial Accounting?

Revenue minus cost of goods sold. Gross profit answers a simple question: after you pay for the stuff you sold, how much is left over? Say you run a sneaker stand — you sell a pair for $100 but paid $60 to buy that pair from the supplier. Your gross profit is $40. It's revenue (the money customers paid) minus the cost of goods sold (what those specific items cost you), and it tells you whether the core product is even profitable before you worry about rent, ads, and salaries.

Gross profit

Financial Accounting glossary · Assets: Cash, Receivables, Inventory, PP&E & Intangibles

Definition

Revenue minus cost of goods sold.

Gross profit in plain English

Gross profit answers a simple question: after you pay for the stuff you sold, how much is left over? Say you run a sneaker stand — you sell a pair for $100 but paid $60 to buy that pair from the supplier. Your gross profit is $40. It's revenue (the money customers paid) minus the cost of goods sold (what those specific items cost you), and it tells you whether the core product is even profitable before you worry about rent, ads, and salaries.

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Practice Gross profit

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