What is included in the determination of net profit?

Net profit is determined by calculating the difference between gross profit and total expenses. Gross profit is derived from total revenue reduced by the cost of goods sold (COGS), which reflects the direct costs associated with the production of goods sold by a company. After establishing gross profit, the next step involves subtracting all operating expenses, interest, taxes, and any other expenses that the business incurs during the period.

This comprehensive assessment of gross profit minus total expenses captures all financial activities affecting the company's bottom line, leading to the accurate determination of net profit.

The other options do not encompass the larger picture of what constitutes net profit. For instance, only considering revenue from sales would ignore necessary expenses, while taking gross profit minus taxes only misses operating and other expenses critical for calculating net profit correctly. Lastly, current assets minus liabilities pertains to a measure of financial position (working capital) and does not relate to income or profit calculations.