Profit
The difference between the income and cost of the firm is called as profit. It can be calculated as:
Profit = Income - Cost
There are two types of profits,
1. Gross profit
2. Net profit
Gross profit
The profit earn by the firm before meeting the operating expenditure is called as gross profit.
Gross profit = Sales - Cost of sales
Net profit
The profit earn by the firm after meeting operating expenses are net profit.
Net profit can be calculated as:
Net profit = Gross profit - Operating expenses
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