A company's net sales minus cost of goods sold is called Blank______.Multiple choice question.gross profitstockholders equitynet incomeretained earnings

Break Down the Problem

1. Identify the key components in the question: net sales, cost of goods sold, and the term we are trying to fill in.
2. Review the provided options to determine which one accurately represents the difference between net sales and cost of goods sold.

Relevant Concepts

1. Net Sales: Refers to the revenue from sales after deducting returns, allowances, and discounts.
2. Cost of Goods Sold (COGS): The direct costs attributable to the production of the goods sold by a company.
3. Gross Profit: This is a financial metric calculated by subtracting COGS from net sales.

Analysis and Detail

• The formula to calculate Gross Profit is: $\text{Gross Profit} = \text{Net Sales} - \text{Cost of Goods Sold}$
• The other options do not represent this calculation:
  • Stockholders Equity refers to the residual interest in the assets of a company after deducting liabilities.
  • Net Income is the total profit of a company after all expenses have been deducted from revenues.
  • Retained Earnings is the cumulative amount of net income that has been retained in the company rather than paid out as dividends.

Verify and Summarize

• Since Gross Profit is directly derived from the given components (net sales minus COGS), this clearly matches our definition.

Final Answer

The correct choice is gross profit.