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GCSE Business · key term
Sales revenue minus cost of sales, before other expenses are deducted.
Used by AQA, Edexcel and OCR
Paper 1, Paper 2
Revenue minus cost of sales.
Revise: Financial StatementsGross profit shows what remains from sales after the cost of sales has been covered. This money must still cover other expenses. Net profit shows what remains after those expenses have also been deducted.
Sales revenue minus the cost of sales, before other operating expenses are deducted.
Specification 2.4.1 · Paper 2
Sales revenue minus cost of sales: the amount available to cover other operating expenses and interest before leaving net profit.
Revise: Business CalculationsThis distinction matters: a business can earn a substantial gross profit but retain much less once its other expenses are paid. If those expenses and interest exceed gross profit, the business makes a net loss. Under the formula used here, net profit is before tax.
Paper 2
The amount remaining from total revenue after deducting cost of sales, before other business expenses are deducted.
Revise: Calculation of Profit and LossGross profit is the amount left from revenue after deducting the cost of sales. Cost of sales means the costs directly associated with the goods or services sold.
Total revenue minus cost of sales, before other expenses are deducted.
Revenue remaining after the direct costs of producing the goods or services sold have been deducted.
Use revenue as the denominator for both margins; net profit margin is not net profit divided by gross profit.
Keep all figures on the same time basis: do not subtract monthly expenses from annual gross profit.
Check whether the question asks for gross profit or net profit: expenses are deducted for net profit, not gross profit.
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