What is a profit?

• A. The money left after subtracting costs from revenue in a business
• B. A loan from a bank
• C. A type of tax
• D. The total sales

Answer: (A)

Profit is the money left over after you subtract all the costs of running a business from the money you bring in by selling goods or services. Think of revenue as the total sales you make, and costs as everything you spend to operate—materials, wages, rent, and other expenses. If what you earn from customers is more than what you spend, the leftover amount is profit—the earnings the business keeps. If costs exceed revenue, you’d have a loss.

So, in simple terms, profit equals revenue minus costs. The other options aren’t profit: a loan is borrowed money that must be paid back; a tax is a payment to the government; total sales describes revenue, not what’s left after expenses.