Business, Legal & Accounting Glossary

Definition: Profit


Quick Summary of Profit

Calculated as revenue minus expenses.

What is the dictionary definition of Profit?

Dictionary Definition

  1. Total income or cash flow minus expenditures. The money or other benefits a non-governmental organisation or individual receives in exchange for products and services sold at an advertised price.
  2. dated, literary Benefit, positive result obtained.
  3. legal In property law, a nonpossessory interest in land whereby a party is entitled to enter the land of another for the purpose of taking the soil or the substance of the soil (coal, oil, minerals, and in some jurisdictions timber and game).

Full Definition of Profit

Profit = income – expenses, when the result is a positive number.

Profit is basically a financial benefit. Profits are made by companies when income generated by them during a certain period of time exceeds expenses made during the same period. Various taxes paid by a particular company are also taken into account while calculating profits. There are several ways of spending the profit earned by a business organization.

Utilization Of Profit

There are two main ways in which profits may be utilized. Profits may be collected by owners of a business or maybe spent on business activities. Profit is calculated as the difference between total revenue and total expenses. Profit is the primary business motive of any and every business establishment, irrespective of its size or area of operation. However, it has been observed that some companies take a long time to achieve profits in their business endeavours.

Economic Profit

Economic profit is a substitute for economic value added. It is different from accounting profit, which is a generally accepted form of profit. Economic profits are calculated by subtracting opportunity costs from revenues earned by a company.


There are two broad definitions of expenses. One accepted definition is that these are costs that are incurred by a company when it tries to generate revenue. Expense is also regarded as tax-deductible costs. Certain examples of expenses are payments made to suppliers, factory leases, wages paid to employees, and depreciation costs.

Income Statement

An Income statement is documentation of the financial performance of a company for a particular accounting period like a month for example. It is a summary of revenues generated and expenses made in that particular accounting period. Income statements are also called a statement of revenue and expense and profit and loss statement.

Net Income

Net income may be defined as total earnings or profit made by a particular company excluding all types of operational expenses. Net income may be computed by taking into account revenues earned by a company and expenses made by that company at that accounting period like – business costs, interests paid, depreciation costs, and taxes paid.

Synonyms For Profit


Cite Term

To help you cite our definitions in your bibliography, here is the proper citation layout for the three major formatting styles, with all of the relevant information filled in.

Page URL
Modern Language Association (MLA):
Profit. Payroll & Accounting Heaven Ltd.
January 26, 2022
Chicago Manual of Style (CMS):
Profit. Payroll & Accounting Heaven Ltd. (accessed: January 26, 2022).
American Psychological Association (APA):
Profit. Retrieved January 26, 2022
, from website:

Definition Sources

Definitions for Profit are sourced/syndicated and enhanced from:

  • A Dictionary of Economics (Oxford Quick Reference)
  • Oxford Dictionary Of Accounting
  • Oxford Dictionary Of Business & Management

This glossary post was last updated: 29th November, 2021 | 30 Views.