What does gross profit mean on the CPA exam?
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Gross profit. Sales less the cost of goods sold, before any operating expense. What the product itself earns.
Related terms
- cost of goods sold: What the items actually sold cost to make or buy.
- contribution margin: Sales less variable cost.
- net profit margin: Net income divided by sales.
- statute of frauds: The rule that certain contracts are unenforceable unless evidenced in writing and signed, including sales of land, sales of goods of 500 dollars or more, and agreements that cannot be performed within a year.
- transaction price: The consideration an entity expects to be entitled to for transferring goods or services, excluding amounts collected for third parties such as sales tax.
- internal service fund: A proprietary fund that supplies goods or services to other parts of the same government on a cost-reimbursement basis, such as a motor pool.