Gross Profit
Definition
Revenue minus cost of goods sold (COGS). Represents the profit before operating expenses, taxes, and interest. Gross profit margin (gross profit / revenue) indicates pricing efficiency.
Related Terms in Core Accounting
Journal Entry
A record of a financial transaction in the general ledger, showing debits and credits. Manual journal entries handle adjustments, corrections, and non-standard transactions that don't originate from invoices or bills.
Net Profit
The bottom line — revenue minus all expenses including COGS, operating costs, interest, and taxes. Also called net income. The P&L statement's final figure.
Profit & Loss Statement (P&L)
Also called an income statement. Shows revenue, expenses, and profit or loss over a period. Essential for understanding business performance. HelloBooks generates P&L reports automatically with AI-powered insights.
Trial Balance
A report listing all general ledger accounts and their balances to verify that total debits equal total credits. Used to check for errors before preparing financial statements.
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