High School

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------------------------------------------------ In accounting, how is profit generally calculated?

A) Total revenue minus total expenses
B) Total expenses minus total revenue
C) Total assets minus total liabilities
D) Total sales minus total cost of goods sold

Answer :

In accounting, profit is generally calculated as A) Total revenue minus total expenses.

The difference between total revenue and total costs is used to compute profit. This computation illustrates how much money is left over after all operating expenses have been met and represents the financial performance of a company over a given time period.

  • Total Revenue: The total amount earned from sales or services.
  • Total Expenses: The costs incurred in generating that revenue, including operating costs, salaries, rent, and other expenses.
  • Thus, profit = Total Revenue - Total Expenses.

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