what is the diffrence between gross profit& net proffit?
Answer Posted / sanjeeb kumar panda
Gross Profit or Loss:
Gross profit is ascertained by deducting cost of goods sold (all direct expenses like purchases, carriage, custom duty, sock charges, octroi duty etc.) from sales.
Gross profit = Total sales - All direct expenses or cost of goods sold
For example, suppose Mr. X purchased some goods for $10,000 and paid $200 on account of carriage and $100 as octroi duty. He sold the goods for $1,4000. Now, the cost of goods sold will be $10,300 (10,000 + 200 + 100) and gross profit will be $3,700.
Gross profit = Total sales - Cost of goods sold
= 14000 - 10300
=3,700
Thus the account which is prepared to determine the gross profit or gross loss of a business concern is called trading account.
Net Profit or Loss:
It is ascertained by deducting all indirect expenses (the expenses incurred for running the business and selling the goods) from the gross profit.
Net profit = Gross profit - All indirect expenses
Suppose in the above example, Mr. X paid $1,000 as salaries and $500 as rent. His net profit will be $2,200.
Net profit = Gross profit - All indirect expenses
= 3,700 - 1,500
= 2,200
Thus the account which is prepared to determine the net profit or net loss of a business concern is called profit and loss account
Is This Answer Correct ? | 1 Yes | 0 No |
Post New Answer View All Answers
What is the meaning of Debt reconciliation and how to do debt reconciliation?
what type of questions are asking for fund administration???
Please send the clerical exam questions and answers to my mail Id pinky18.02.1985@gmail.com
Nature of training account with reason
what is the good prasentation on interview
What is the definition of LOSS. Give the formula if any.
With scan-based trading, are retail companies creating inventory at the point of sale or recording income/expense?
pls send me capital iq quition paper pls, ihave 2mr interview thanks
what are the steps used in UAT in Oracle Apps?
EXPAND___________IMF
What do you mean by Adjustment
what are the seven accounting rules
How to enter PO in SAP
1.tell about urself? 2.wt is BRS? 3.VAT? 4.Golden principle of accounting?
income from depreciated asset is profit or loss?