Gross and net Profit. Flashcards
What is the cost of sales?
The cost of producing the product.
What is the cost of sales the total of?
All of the direct costs.
What is gross profit?
The money left once the cost of sales is taken away from the revenue.
Can a gross profit be negative?
Yes.
Can a gross profit be positive?
Yes.
What is revenue?
All of the money a business receives.
What is the formula for gross profit?
revenue - cost of sales
MegaJane sells cake. In 2012, her revenue was £525 and her cost of sales was £300. Calculate her gross profit in 2012.
£225
Will the net profit be positive if the gross profit is positive?
Not always.
Will the net profit be negative if the gross profit is negative?
Yes, as there would be nothing to deduct overheads from, so there would be no chance to make profit.
What is net profit?
The money left over once all costs are deducted.
What is the formula for net profit?
gross profit - expenditure
