[Allen Farber]

Hey, I was wondering How Do You Find Gross Profit & Net Profit?


So using this information, how would you find it?:


At the end of the year, I, as a business owner, took out $7,000 from a bank to start up my company. I made loan payments throughout the year and by the end, I had paid it all off. It totaled to $7,000 in principal, and $70 in interest. I also earned $500 from gross sales and $400 from net sales (before any expenses and costs were subtracted). I then took $100 out of the $400 and put it into the company bank account, giving me $10 in interest income. At the end of the year, I had spent $200 in employee wages, $150 in property taxes, $200 in income taxes, and $300 in materials, although only $200 worth were used and sold. The remaining $100 worth were put in inventory. So using this info, how would you calculate Gross & Net Profit?

[ScottGem]

There is gross revenue and net profit. Revenue is the money earned by the business, net profit is what you actually gained after expenses.

[Allen Farber]

There is gross revenue and net profit. Revenue is the money earned by the business, net profit is what you actually gained after expenses.

Okay, well if I'm trying to figure out my net profit and or filing my federal income taxes, what would be on the top line (what is before any deductions)? Would it strictly be revenue or could I also include other forms of income like money I got from the bank or interest income?

[ScottGem]

Depends on the nature of your business and filing type. In my sole proprietorship, I list all income then list all expenses.

[paraclete]

Let's put it this way, gross profit is what you have left over after you have paid for the goods you sold. Net profit is what you have left over again after expenses. If you don't understand these concepts get an expert to do the tax return otherwise you might cost yourself money. Looking at the data I would say you need to understand what loss means becuase net profit left long ago

[Allen Farber]

Let's put it this way, gross profit is what you have left over after you have paid for the goods you sold. Net profit is what you have left over again after expenses. If you don't understand these concepts get an expert to do the tax return otherwise you might cost yourself money. Looking at the data I would say you need to understand what loss means becuase net profit left long ago

Okay, but do I deduct the costs of goods sold from the net sales or gross sales? And along with that, do I also count money I got from a loan and interest income along with sales/revenue considering how that is positive cash flow? I am aware money from the bank is a liability but it's still money I have along with revenue/sales and interest income.

[paraclete]

Deduct cost of goods sold from gross income, loan interest is income, a loan is capital. I don't understand your ideas here how does sales revenue differ from sales? Without actually looking at the form you are filling in you cannot be advised properly. The basic accounting equation is Sales minus cost of sales equals gross profit, less expenses equals net profit/loss from trading, add/deduct other income/other expenses and you have taxable income


At the end of the year, I, as a business owner, took out $7,000 from a bank to start up my company. I made loan payments throughout the year and by the end, I had paid it all off. Capital transaction

It totaled to $7,000 in principal, and $70 in interest. Interest expense

I also earned $500 from gross sales and $400 from net sales (before any expenses and costs were subtracted).

I then took $100 out of the $400 and put it into the company bank account, giving me $10 in interest income. Other Income

At the end of the year, I had spent $200 in employee wages, $150 in property taxes, $200 in income taxes, and $300 in materials, although only $200 worth were used and sold. The remaining $100 worth were put in inventory. So using this info, how would you calculate Gross & Net Profit?

questions about your narrative

What represents the difference between gross sales and net sales from what you have said here that difference should be $200 not $100

So sales $500, COS $200 Gross profit $300 Expenses 200+150+70 =$420 loss 120 less other income $10 net loss $110

What are the income taxes here? are the property taxes business related?

Give this to an expert as you obviously don't understand

[Allen Farber]

Deduct cost of goods sold from gross income, loan interest is income, a loan is capital. I don't understand your ideas here how does sales revenue differ from sales? Without actually looking at the form you are filling in you cannot be advised properly. The basic accounting equation is Sales minus cost of sales equals gross profit, less expenses equals net profit/loss from trading, add/deduct other income/other expenses and you have taxable income


At the end of the year, I, as a business owner, took out $7,000 from a bank to start up my company. I made loan payments throughout the year and by the end, I had paid it all off. Capital transaction

It totaled to $7,000 in principal, and $70 in interest. Interest expense

I also earned $500 from gross sales and $400 from net sales (before any expenses and costs were subtracted).

I then took $100 out of the $400 and put it into the company bank account, giving me $10 in interest income. Other Income

At the end of the year, I had spent $200 in employee wages, $150 in property taxes, $200 in income taxes, and $300 in materials, although only $200 worth were used and sold. The remaining $100 worth were put in inventory. So using this info, how would you calculate Gross & Net Profit?

questions about your narrative

What represents the difference between gross sales and net sales from what you have said here that difference should be $200 not $100

So sales $500, COS $200 Gross profit $300 Expenses 200+150+70 =$420 loss 120 less other income $10 net loss $110

What are the income taxes here? are the property taxes business related?

Give this to an expert as you obviously don't understand

Thanks! And I didn't think sales revenue was different from sales. I just put a dash in between the two, indicating they're synonymous. And as for gross sales and net sales, gross sales is what's before any refunds or discounts and net sales is what the after deducting refunds and discounts. One more question, am I allowed to subtract all the money I spent on materials or only the portion I sold/used. Because I've had two different accounting people tell me two different things. One said I can take off the whole thing and the other said I can only take off which portions been used because the remaining materials are an asset. thanks in advance

[paraclete]

You must not confuse captions and subtotals with data