Net Profit is defined as?

• A. The total revenue before costs.
• B. The amount of revenue remaining after all expenses are deducted.
• C. Cash on hand at year-end.
• D. The amount invested by owners.

Answer: (B)

Net profit shows how much money remains after a business has paid all its costs for the period. It equals total revenue minus every expense, including operating costs, the cost of goods sold, depreciation, interest, and taxes. This figure reveals true profitability and contributes to retained earnings, but it isn’t the same as cash on hand because some expenses are non-cash or timing differences affect cash flow. It’s also different from gross profit, which only subtracts the cost of goods sold, and from the money owners have invested, which is equity. So the correct definition is the revenue remaining after all expenses are deducted.