Profit is money a business earns after expenses are paid. Which option best reflects this concept?

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Study for the GMAS 8th Grade Social Studies Test with focused flashcards and multiple choice questions complete with hints and explanations. Get ready to excel!

Multiple Choice

Profit is money a business earns after expenses are paid. Which option best reflects this concept?

Explanation:
Profit is what remains after expenses are subtracted from revenue, so the amount left after costs is what we call net profit. The option that describes net profit after costs fits this idea exactly. Total revenue before costs describes just revenue, not what’s left after paying expenses. Loans payable are amounts the business owes—liabilities—not profit. An operating budget is a plan for spending and forecasting expenses, not the actual profit earned. So the best choice reflects net profit after costs.

Profit is what remains after expenses are subtracted from revenue, so the amount left after costs is what we call net profit. The option that describes net profit after costs fits this idea exactly. Total revenue before costs describes just revenue, not what’s left after paying expenses. Loans payable are amounts the business owes—liabilities—not profit. An operating budget is a plan for spending and forecasting expenses, not the actual profit earned. So the best choice reflects net profit after costs.

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