Calculating which of the following determines a company's earnings for an accounting period by deducting its operating expenses from gross profit?

The correct choice is net profit because it represents the actual earnings of a company after all expenses, including operating expenses, have been deducted from gross profit. In this calculation, gross profit is derived from gross revenues minus the cost of goods sold (COGS). Once the operating expenses are subtracted from this gross profit, the result is the net profit, which reflects the amount made by the company during the accounting period after accounting for all its core operational costs.

This concept emphasizes the importance of understanding how gross profit and operating expenses collectively impact a company’s profitability. Other terms, such as gross revenues, cost of goods sold, and net sales, have different roles in financial accounting. Gross revenues reflect total income before any deductions, cost of goods sold pertains to the direct costs associated with the production of goods sold, and net sales are calculated by subtracting sales returns, allowances, and discounts from gross revenues. None of these provide a measure of profit after expenses like net profit does.