What is your definition of NET profit and Gross profit
 

OK, i think i'm losing my mind here.

I've always assumed that NET profit was the around of money you have left over once you pay for all you expenses. As for GROSS Profit, that was the money you have before you pay expenses.

Here's a simple example

$10,000 Made this month (Gross Profit)
$5,000 - Expenses

$5,000 = would be your NET Profit right?


If that is the case then why does reference.com say otherwise?

http://dictionary.reference.com/search?q=gross%20profit

http://dictionary.reference.com/search?q=net%20profit

Either i need to lay off the pot and take a course in business or this site is wrong..

So, which is it?

Take an accounting class, everyones definition should be pretty damn near the same.

Made: total revenue
Made after expenses in raw materials (that is, the cost of what you are selling): gross profit
Made after all expenses: net profit

So, for instance, you sell books for $25 each. That's your total revenue on them.
However, you buy them for $10 each, so your gross profit per book is only $15.
But wait... you need an office, a phone, a company car, etc, and you have to pay your taxes ofcourse. Let's say that averages out on $10 a book. Then, your net profit is $5 per book.

okay, it has been many, many years since I took business, but as I recall:

gross: how much you brought in
gross profit: how much you brought in, less the cost of what it was you sold
net profit: how much was left after you deducted all the other expenses over and above the purchase cost of what you sold

ie:

you make $500 selling widgets - that is gross

the widgets cost you $250 - so you have $250 gross profit

you had to pay commissions of $125 to widget salesmen, $10 to package the widgets, $15 to house the widgets before selling them, and $50 in other various expenses associated with widgets - so you had $50 net profit

at least that is how I recall it.

cross post - that is what I was saying too . . .. widgets just have a higher profit margin than books :thumbsup

i think its time for that course ;) DAMN.. maybe give up the chronic as well!

Thanks!

ehm... $5 out of $25 is 20%, $50 out of $500 is 10%...

Talk to a CPA, buy "Accounting for Dummies" or at least do some reading on Intuit's website.. Posting on GFY for help with accounting definitions isn't very wise!

I told you I had not been to school in many years . . . . besides, I pay higher commissions . . . . just look at Sex Pictures Pass :)