In the world of finance and business, the money left over after you subtract expenses from Accounting Services Jersey City is most commonly called Profit.
However, depending on which specific costs you are subtracting, the name changes. Accountants and business owners use different terms to describe how "deep" they are into the calculation.
1. Gross Profit
This is the most basic level of profit. It represents the money left over after subtracting only the Variable Costs (also known as the Cost of Goods Sold or COGS). These are the direct expenses required to make a product, like raw materials and labor.
2. Operating Profit
This is a more "real-world" look at a business’s health. It takes your Gross Profit and subtracts Operating Expenses—the overhead costs required to keep the lights on, such as rent, utilities, marketing, and administrative salaries.
In professional financial statements, this is often referred to as EBIT (Earnings Before Interest and Taxes).
3. Net Profit (The "Bottom Line")
When people ask "What is the final profit?", they are talking about Net Profit. This is the amount remaining after every single expense has been paid, including:
Interest on loans
Taxes
Depreciation
One-time legal or maintenance fees
This is called the "bottom line" because it appears at the very bottom of an income statement.
Other Common Terms
Net Income: This is the formal accounting term for Net Profit.
Earnings: Often used by public companies when reporting to shareholders.
The Surplus: Frequently used in the context of non-profits or government budgets where "profit" isn't the primary goal.
Margin: While profit is a dollar amount, the "margin" is that same value expressed as a Bookkeeping and Accounting Services Jersey City of the total revenue.