Definition - What does Gross Profit mean?
Gross profit is equivalent to revenue minus cost of goods sold, and refers to what is made on a product before any taxes are paid and after the cost of manufacturing is taken into consideration. Gross profit is what taxes are based on, and companies will be legally obligated to pay a percentage of the gross profit to tax as well as account for gross profit separately on the balance sheet.
Justipedia explains Gross Profit
Companies have to have clear lines of how much profit should be taken into consideration when a product is sold, but must also be aware of all other associated costs.
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