Multiple choice

Gross profit equals

  1. Sales minus Cost of Goods Sold (COGS)

  2. Net profit - sales profit

  3. Revenue minus accounts payable

  4. Accounts payable minus owners equity
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A Correct answer
Explanation

Gross profit is the profit a business makes after deducting the direct costs of producing and selling its products (COGS) from its total sales revenue. Net profit is calculated later, after also subtracting all other operating expenses and taxes.

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