What are Gross Profit and Net Profit

Gross Profit: - Gross profit is the difference between sales and cost of goods sold. That means when we deduct cost of goods sold from sales we will get gross profit. We can calculate cost of goods sold by using the following formula.

Cost of goods sold = Opening stock + Purchase – Closing Stock.

Net Profit: - When we deduct all operating, non operating expenses and income tax from gross profit we will get Net profit or net income.