Which term reflects the difference between sales revenue and the cost of sales?

Which term reflects the difference between sales revenue and the cost of sales?

• A. Net Income
• B. Gross Profit
• C. Operating Income
• D. Sales Margin

Answer: (B)

The term that reflects the difference between sales revenue and the cost of sales is gross profit. Gross profit is calculated by subtracting the cost of goods sold (COGS) from the total sales revenue. This figure provides insight into how efficiently a company produces and sells its goods while accounting for the basic costs associated with those goods. Gross profit is an essential metric for evaluating a company's financial health, as it shows the amount of money made before accounting for other expenses like operating costs, taxes, and interest. Understanding gross profit helps businesses determine their pricing strategies and cost management while indicating the core profitability of their products or services.

The term that reflects the difference between sales revenue and the cost of sales is gross profit. Gross profit is calculated by subtracting the cost of goods sold (COGS) from the total sales revenue. This figure provides insight into how efficiently a company produces and sells its goods while accounting for the basic costs associated with those goods.

Gross profit is an essential metric for evaluating a company's financial health, as it shows the amount of money made before accounting for other expenses like operating costs, taxes, and interest. Understanding gross profit helps businesses determine their pricing strategies and cost management while indicating the core profitability of their products or services.