How to Define Gross Profit

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The definition of gross profit is the basic revenue of a business minus the cost of creating that business. Determine gross profit for a business by figuring out the difference between revenue and the cost of sales with help from a certified public accountant in this free video on accounting terms.

Part of the Video Series: Business & Accounting Terms
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In this clip we will define gross profit. When a, when we engage in business affairs, one of the important things we have to do is measure that business in order to determine whether we make a profit and continue in business. The gross profit is the basic revenue of the business less the direct cost of creating that business. For example, if we sell socks in a retail store; the sales of those socks are the revenue of the business, the cost to purchase those socks to have them available is the cost of sales. The difference between the revenue and the cost of sales is the gross profit.

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