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Answer :
To determine which option describes what profits are equal to, let's analyze each choice:
1. Revenue minus total cost:
- Profit is typically calculated as the difference between total revenue and total cost. This means taking the money earned from selling goods or services (revenue) and subtracting the expenses incurred in making those goods or services available (cost). This is a standard definition of profit in business.
2. Assets minus total liabilities:
- This describes net assets (or equity), not profit. It is used to determine the net worth of a company, not its profit.
3. Sales minus wages and salaries:
- This option focuses only on one specific cost (wages and salaries) and not the other costs associated with running a business. Therefore, it doesn't accurately represent how profit is calculated.
4. Sales minus taxes and depreciation:
- This option is incomplete for calculating profit. While taxes and depreciation are components of costs, there are other costs to consider for calculating true profit.
Based on these explanations, profits are properly expressed as total revenue minus total cost.
1. Revenue minus total cost:
- Profit is typically calculated as the difference between total revenue and total cost. This means taking the money earned from selling goods or services (revenue) and subtracting the expenses incurred in making those goods or services available (cost). This is a standard definition of profit in business.
2. Assets minus total liabilities:
- This describes net assets (or equity), not profit. It is used to determine the net worth of a company, not its profit.
3. Sales minus wages and salaries:
- This option focuses only on one specific cost (wages and salaries) and not the other costs associated with running a business. Therefore, it doesn't accurately represent how profit is calculated.
4. Sales minus taxes and depreciation:
- This option is incomplete for calculating profit. While taxes and depreciation are components of costs, there are other costs to consider for calculating true profit.
Based on these explanations, profits are properly expressed as total revenue minus total cost.
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