Question

Sales less cost of goods sold is called:

• A. Operating profit
• B. Gross profit
• C. Net profit
• D. Total profit

Hint:

Gross Profit = Net Sales – COGS. It measures trading efficiency before considering other expenses.

Answer 1

The Correct Option is B

Step 1: Recall formula.
\[ \text{Gross Profit} = \text{Net Sales} - \text{Cost of Goods Sold (COGS)} \]
Step 2: Explanation.
- Gross profit measures the profitability from core trading activities before deducting administrative, selling, and financial expenses.
- Operating profit = Gross profit – Operating expenses.
- Net profit = Operating profit – Interest – Taxes.
Step 3: Conclude.
Thus, sales less cost of goods sold is called Gross Profit.
Final Answer: \[ \boxed{\text{Gross profit}} \]