2021 · Q46
Which one of the following denotes Gross Profit?
General Accounting Principles, Auditing and InsuranceFinal accounts
- ACost of goods sold + Opening stock
- BSales less Cost of goods sold
- CSales less Purchases
- DNet profit less Expenses of the period
Explanation
Gross profit is the profit from core trading operations, computed as net sales minus the cost of goods sold (opening stock + purchases + direct expenses − closing stock), and is shown in the trading account. Option (A) garbles the COGS formula, (C) ignores opening/closing stock and direct expenses, and (D) describes net profit after all expenses. Hence (B) Sales less Cost of goods sold is correct.