Multiple choice

Gross profit is

  1. excess of sales over cost of goods sold

  2. sales less purchases

  3. cost of goods sold + opening stock

  4. net profit less expenses of the period

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A Correct answer
Explanation

Gross profit is the difference between net sales revenue and the cost of goods sold. It represents the profit before deducting operating expenses, interest, and taxes. Sales less purchases ignores opening/closing stock adjustments, while cost of goods sold plus opening stock is a component calculation, not the gross profit itself.

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