What is a firm's gross profit?
A) the difference between the sales and other income generated by the firm, and all costs, taxes, and expenses incurred by a firm in a given period
B) the difference between sales revenues and the costs
C) the difference between sales revenues and cash expenditures associated with those sales
D) all of the above

Question

Quizplus · Accepted Answer

Gross profit is the difference between sales revenues and the costs associated with generating those sales. It does not include other income or expenses beyond the direct costs of production. Choice A includes all expenses and taxes, while choice C only includes cash expenditures, making them too broad or too narrow to be considered gross profit.

What Is a Firm's Gross Profit