The bottom line: what's left after every expense.
Net profit is the bottom line: revenue minus everything — cost of goods sold, operating expenses, interest, and (depending on the report) taxes. It's the number people mean by 'the business made $X this year.'
On the balance sheet, net profit flows into retained earnings — the formal link between the P&L and the balance sheet. Two honest caveats: net profit is not cash (see the cash flow statement), and it's only as truthful as the bookkeeping beneath it — owner draws misrecorded as expenses, or personal spending mixed in, distort it directly.
Revenue $150,000; COGS $45,000; operating expenses $70,000; interest $5,000. Net profit: $30,000 — a 20% net margin. Whether the bank account grew $30,000 is a different question, answered by the cash flow statement.
Gross Profit · Retained Earnings · Cash Flow Statement — or browse the full plain-English glossary.
Reading a definition is the easy part — the Daily Challenge (ten questions a day, free, no signup) is how terms like this become reflexes. Going for certification? Start with the free ProAdvisor readiness check.