Net profit is best described as what relationship between revenue and expenses?

• A. Revenue minus expenses
• B. Expenses minus revenue
• C. Revenue plus expenses
• D. Assets minus liabilities

Answer: (A)

Net profit represents what remains after all costs have been subtracted from what the business earns. It is calculated by taking revenue (income from sales) and subtracting expenses (costs like salaries, rent, materials). When revenue is greater than expenses, you have profit; if expenses exceed revenue, you have a loss.

So the best description of net profit is revenue minus expenses. Subtracting in the reverse order would imply expenses exceed revenue (a loss) rather than profit. Adding revenue and expenses isn’t a standard measure of profitability, and assets minus liabilities refers to equity, not profit.