Profit Calculation for Consultants

Steps:

• Revenue is fees received from clients.
• Consultants have no typical cost of sales (like inventory); costs are operating expenses.
• Subtract all expenses from revenue to get net profit.
• Formula: Profit = Fees received - Expenses.

Why the correct option is correct:

• Net profit for service businesses equals revenue minus total expenses, per basic accounting principles.

Why the others are wrong:

• A: Yields gross profit by ignoring operating expenses.
• B: Incorrectly adds expenses, inflating profit.
• C: Adds costs to revenue, not subtracting them.

Final answer: D