Net profit = Gross profit −:

**The reasoning** Think of your business like this: **Gross profit** is the money you make *after* paying for the goods you sold (Cost of Goods Sold). But you're not done yet! You still have other bills to pay — rent, salaries, transport, electricity, advertising. These are your **operating expenses**. **Net profit** is what's *actually* left in your pocket after paying all those bills. The formula is simple: **Net profit = Gross profit − Expenses** So if you made ₦100,000 gross profit but spent ₦30,000 on expenses, your net profit is ₦70,000. **Why the wrong options tempt you** - **Sales (A)** — Sales is what you *subtract from* to get gross profit, not net profit. It comes earlier in the calculation. - **Stock (C)** — Stock (inventory) affects cost of goods sold, which you already used when calculating gross profit. - **Discount (D)** — Discounts reduce sales *before* you even calculate gross profit. **Quick takeaway** Gross profit means "after paying for goods"; net profit means "after paying for *everything*" — and that "everything else" is **expenses**.