Net Profit Refers to

question 227

Multiple Choice

Net profit refers to

• A) the result of deducting liabilities from the assets of the firm.
• B) the result of subtracting cost of goods sold from revenues.
• C) the result of deducting depreciation expense from revenues.
• D) the net earnings after the deduction of all expenses, including tax expense.

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Definitions:

Prepaid Insurance

An asset account representing insurance payments made in advance for coverage extending beyond the current accounting period.

Accounts Receivable

Outstanding payments that a business is entitled to receive from its customers for delivered goods or services.

Miscellaneous Expense

A category for expenses that don't naturally fit into other specified categories in financial accounting.

Cash Account

A type of account in finance that records all cash transactions, including receipts and payments.