Gross profit is calculated as net sales minus cost of goods sold. It represents the amount of revenue that remains after deducting the cost of producing goods or services sold. Gross profit is not the same as net income as it does not take into account operating expenses. It is also calculated regardless of whether a company uses the perpetual inventory system or periodic inventory system.

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Gross Profit Is

Question 61

Multiple Choice

Gross profit is

A) Subtracted from operating income to get net income.
B) A special general ledger account.
C) Net sales less cost of goods sold.
D) Only calculated when using the perpetual inventory system.
E) The same as net income.

Correct Answer: