Profit - SS2 Commerce Lesson Note

Profit is the financial gain or benefit that a business or individual earns after deducting all expenses from the revenue generated through business activities. It is the positive difference between the total income earned and the total expenses incurred.

Gross Profit

Gross profit is the amount of money that remains after subtracting the cost of goods sold (COGS) from the total revenue earned by a business. It represents the profit made from the core operations of a business before deducting other expenses such as overhead costs, taxes, or interest payments.

Net Profit

Net profit, also known as net income or net earnings, is the final amount of profit after subtracting all business expenses, including COGS, operating expenses, taxes, interest, and any other deductions, from the total revenue. Net profit reflects the overall profitability of the business and indicates the amount of money the business has earned after covering all expenses.

In simple terms, gross profit represents the profit made from selling goods or providing services before accounting for other expenses. It focuses solely on the costs directly associated with production. Net profit, on the other hand, is the final profit earned after deducting all expenses, providing a more comprehensive view of the business's financial performance.