The correct answer is: A. Gross profit = Net sales – Cost of goods sold.
Gross profit is a measure of a company’s profitability. It is calculated by subtracting the cost of goods sold from net sales. Net sales is the total revenue generated by a company from its sales, minus any discounts or returns. The cost of goods sold is the direct costs associated with producing the goods that a company sells. These costs include the cost of materials, labor, and overhead.
Gross profit is an important metric because it shows how much money a company is making from its core business operations. It is also used to calculate other important metrics, such as operating profit and net income.
Option B is incorrect because it includes the closing stock in the calculation of gross profit. The closing stock is the value of the inventory that a company has on hand at the end of an accounting period. It is not part of the cost of goods sold.
Option C is incorrect because it includes the cost of goods sold in the calculation of sales. Sales is the total revenue generated by a company from its sales, not including any costs.
Option D is incorrect because only option A is correct.