General Certificate of Secondary Education (GCSE) Business Practice Exam

Gross profit is defined as the difference between sales revenue and the cost of goods sold. This figure represents the amount a business earns from selling its products after accounting for the direct costs that are associated with producing or purchasing those products. Gross profit is a key indicator of a company's financial health as it measures how efficiently a company is using its resources to produce goods.

This concept is crucial for businesses because it helps them assess how well they are managing their production costs relative to their sales. Knowing the gross profit allows a business to make informed decisions regarding pricing, cost control, and overall strategy for profitability. It does not include operational expenses, taxes, or other costs, which would be considered in net income calculations.

The other options focus on different financial metrics: total revenue minus operational expenses refers to operating profit; revenue from all sources encompasses total income, including non-sales related activities; and net income looks at the profitability after all expenses, not just the direct costs of goods sold. Thus, the choice correctly identifies the specific calculation that defines gross profit.