Nett Profit, often called the 'Bottom Line', is what is left over from Revenue after all the associated expenses are taken out.
It is the Nett profit that you will pay taxation on.
Nett Profit belong to the owner and is added to Owners equity.
In this way it increases the net worth of the business and, if not reduced by Drawings, allows the business to grow.
Nett Profit links the two main Accounting reports the Profit and Loss Statement and Balance Sheet.
It is important to understand that Nett Profit is not necessarily the same as cash.
A profitable business can go bankrupct if it runs out of cash.
Cash Flow is the Life Blood of a business.
For example,
if you sell an item for $25000 for which you paid $10000 cash you have made a profit of $15000.
However if the sale was on credit your bank balance could be -$10000 until the payment is received.
Furthermore you may be liable to pay tax, say $5000, on the $15000 profit you made.
So with a Profit of $15000 you be $15000 overdrawn at the Bank!
Other factors which cause differences between nett profit and cash include
depreciation,
purchase of a fixed asset and
drawings.
Gross Profit is what is left over from Revenue after the expenses directly associated with that Revenue, such as purchases, are taken out.
Net Profit is Gross Profit less the other expenses of doing business.