Future Business Leaders of America (FBLA) Hospitality Management Practice Test

What is the term for the financial gain calculated as the difference between money earned and spent?

1. Loss

2. Revenue

3. Profit

4. Budget

The correct answer is: Profit

Profit is the term used to describe the financial gain that results from the difference between money earned and money spent. In a business context, profit indicates the profitability of an operation, allowing stakeholders to assess its financial health. When revenue (the total income generated from business operations) exceeds expenses (the costs incurred in running the business), the result is a profit. This positive difference serves as a key indicator of a company's success, enabling reinvestment, distribution to shareholders, or retention for future growth. The other terms mentioned do not represent the same concept as profit. For example, revenue refers specifically to the total income before any expenses are deducted, while a budget is a plan outlining expected income and expenditures, and loss describes a situation where expenses exceed income, leading to negative financial results. Understanding profit is essential in evaluating the performance of a business and making informed financial decisions.