Chapter 4, Problem 3DQ

To determine

Sales:

It means total money collected by an entity on sale of goods. In other words, it is the revenue of the entity which is generated by performing the business activities.

Positive Gross Profit: It means the profit which is made after deducting the making and selling cost associated with its products. In other words, the formula to calculate positive gross profit is,

   $\text{Gross}\text{Profit}=\text{Revenue}-\text{Cost}\text{of}\text{Goods}\text{Sold}$

Net Loss: It means the negative amount which has arrived after deducting various expenses related to the business operations. This negative amount comes when the expenses of a business exceed gross profit.

To explain: The case when business can earn a positive gross profit on its sales and still have a net loss.