The net profit is calculated as

Gross profit is what remains after subtracting the cost of goods sold from sales revenue: it tells a business how much it made on trading alone, before counting the other costs of running the business. Net profit goes a step further by also removing the running costs of the business, such as rent, salaries, and advertising, which are grouped together as expenses.

So the calculation for net profit is: gross profit less expenses. Once these operating expenses are deducted from gross profit, what is left is the true profit the business earned in the period.

"Sales less purchases" and "gross profit less purchases" mix up figures that should not be subtracted at the net profit stage, since purchases are already accounted for when gross profit is calculated. "Sales less expenses" skips the cost of goods sold entirely, which would overstate or understate the result and does not match the standard trading and profit and loss account structure.

Remember the sequence: sales minus cost of goods sold gives gross profit, and gross profit minus expenses gives net profit.