Is it as simple as it sounds?
Similar to the word ‘net’, profit is often referred to alongside another word.
Profit is income less expenses.
Here are some examples.
Gross Profit – income less cost of sales
Net Profit – income less all expenses
Profit Margin – net income divided by net sales
Profit Centre – a team within the business responsible for producing profit.
The opposite to profit, is loss.
This is where expenses are greater than income over a period.
Retained earning is profit that has been left in the business as a source of funds.
If someone talks about profit, make sure to check which profit they are referring to as they can all mean very different things.
The aim of running a business is to make profit.
Being aware of the numbers and watching profit grow is part of the fun.
Bookkeeping Terms A to Z 