_____ is the difference between a company’s revenues and all of its expenses.

Question

BlackTom AI · Accepted Answer

Consider the prompt: the blank asks for the term describing the difference between a company’s revenues and all of its expenses.
Option 1: 'Profit surplus' is not a standard financial term for this concept; it sounds like a nonstandard phrasing and could be confused with a general notion of excess or surplus, but not the formal measure.
Option 2: 'Net profit' correctly names the classic accounting measure that equals total revenues minus total expenses, i.e., the bottom-line figure a company earns after all costs are accounted for.
Option 3: 'Gross profit' represents revenues minus the cost of goods sold (COGS) only, not all expenses. It excludes operating expenses, taxes, interest, and other costs, so it is not the full difference between revenues and all expenses.
Option 4: 'Gross margin' is a ratio or percentage, typically (gross profit / revenues) expressed as a percent. It conveys profitability of core production or sales before other expenses, and does not reflect all expenses or the absolute difference.

KSB-111-003.2025F Exam #2 - KSB 111 (Liederman)

_____ is the difference between a company’s revenues and all of its expenses.

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