What is the primary distinction between gross profit and net profit?

The primary distinction between gross profit and net profit involves understanding how each is calculated and what they represent in a business's financial performance. Gross profit is defined as revenue minus the cost of goods sold (COGS). This calculation reflects the profit that a company makes after deducting the direct costs associated with producing its goods or services.

This measure is essential as it helps businesses assess their production efficiency and pricing strategy. It does not take into account other expenses, such as operating expenses, administrative costs, and taxes, which are factored into net profit.

On the other hand, net profit is calculated by subtracting all expenses—operating costs, interest, taxes, and other costs—from total revenue. This figure provides a more comprehensive view of a company's profitability, indicating how much money remains after all obligations have been met.

In summary, option C accurately captures the essence of gross profit by specifying that it is the difference between revenue and the cost of goods sold, highlighting its focus on the core operations of a business concerning direct costs.