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Accountancy
Key concepts
Accountant · Bookkeeping · Trial balance · General ledger · Debits and credits · Cost of goods sold · Double-entry system · Standard practices · Cash and accrual basis · GAAP / IFRS
Financial statements
Balance sheet · Income statement · Cash flow statement · Equity · Retained earnings
Auditing
Financial audit · GAAS · Internal audit · Sarbanes–Oxley Act · Big Four auditors
Fields of accounting
Cost · Financial · Forensic · Fund · Management · Tax
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In accounting, gross profit or sales profit is the difference between revenue and the cost of making a product or providing a service, before deducting overhead, payroll, taxation, and interest payments. Note that this is different from operating profit (earnings before interest and taxes).

Net sales are calculated:

Net sales = Gross sales – Sales returns and allowances.

Gross profit is found by deducting the cost of goods sold:

Gross profit = Net sales – Cost of goods sold.

Gross profit should not be confused with net income:

Net income = Gross profit – Total operating expenses.

Cost of goods sold is calculated differently for merchandising business than for a manufacturer.

See also

• EBITDA
• Profit margin, the ratio of net income to net sales
• Gross margin, the difference between the sales and the production costs

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External links