DECA Sports and Entertainment Marketing Practice Exam

Which definition best captures the term 'profit'?

1. The total revenues generated by a company

2. The total expenses incurred by a company

3. The amount remaining after expenses are paid from income

4. The percentage difference between sales and costs

The correct answer is: The amount remaining after expenses are paid from income

The definition that best captures the term 'profit' is accurate because it encompasses the core concept of profit as the financial gain that remains after all expenses have been deducted from total income. This understanding of profit reflects a fundamental aspect of business operations, where a company must subtract costs associated with producing goods or providing services from the revenues generated through sales. The remaining amount signifies the profit, which is crucial for evaluating a company's financial health and success. In contrast, the other definitions do not fully encapsulate the meaning of profit. The total revenues generated by a company only reflect the income side of the equation, without accounting for expenses. Total expenses incurred provide insight into the costs of running a business but do not indicate profitability on their own. The percentage difference between sales and costs, while relevant to understanding profit margins and efficiency, does not define profit itself but rather points towards the relationship between revenue and expenses. Thus, focusing on the amount remaining after expenses are paid directly aligns with the essence of profit.