Profit and Loss Account
(see Income Statement).
Formula
Gross Profit = Revenue − COGS; Net Profit = Gross Profit − Expenses
Real World
JD Sports' income statement for 2023 showed revenue exceeding £10bn, but after deducting cost of sales and operating expenses, net profit was significantly lower — illustrating how each line matters.
Exam Focus
Know the order: gross profit → operating profit → net profit; misplacing a cost type (e.g. interest) loses method marks.
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