Utah Contractor Practice Exam

_____ is a company's revenue minus its cost of goods sold.

1. Sales

2. Gross Profit

3. Revenues

4. Liabilities

The correct answer is: Gross Profit

The correct answer is Gross Profit because it specifically refers to the amount of money a company makes from its sales after accounting for the direct costs of producing the goods it sells, which is known as the cost of goods sold (COGS). This figure provides insight into the company's financial health by indicating how efficiently it is producing and selling its products. Sales, on the other hand, represent the total revenue generated from selling goods or services before any costs are deducted. Revenues is a broader category that includes all income earned by the company, which can come from various sources, not just from the direct sale of products. Liabilities refer to what a company owes to others and is not related to revenue or profit calculations. Thus, only Gross Profit accurately captures the essence of revenue minus cost of goods sold.