Frankly I don't know why the rest of us bother to post.
With your stellar grasp of the issues, the ability to differentiate between gross and net income and the Wickipedia definition of windfall profits I, for one, am duly impressed.
I agree that 'gross vs net' is pretty remedial stuff. I only spelled it out because Legacy 6 obviously didn't understand it (and specifically asked for the definition of a 'windfall profit'.)
/Now back to our regularly scheduled sniping.
So backpasture why don't you just post your list off stupid people. We can all get our droll cups sit in the corner and read your words of wisdom. Or we could just turn RTF into your blog. That would be fun for all.
The profit is based on a % of invested money. I have a small construction business. But the way I figure my bids and profit is this. Exp. Say I have a 400 sheet drywall job. Not figuring any taping or framing. I order the sheetrock for .32 cents a foot or $6145 add 15% or $920 for supplying and looking at prints. Labor cost me about $50 an hour per guy. I charge $65. Any changes to these costs I raise my price accordingly. But my markup on materials is still 15%. It's not a windfall. An increase in materials cost means I'm risking more of my money to get the job done. I also add a markup if I"ve had prior dealings with the person and they were a pain in the ass, or tried to nickle and dime me.
I don't have to go further do I? Accounting 101 doesn't usually see the 2nd and 3rd order effects of taxes.
It's cold in here regards
Gross Income.....money coming in. So you sell gas for $1.00 a gallon. That would be gross income. It costs you .10 gallon to buy it, .10 gallon to refine it, labor costs are .10 gallon. So the $1 minus the .30 would be .70. You then pay taxes ON the now its called Gross Profit. After you pay your taxes on that amount (gross profit) then you end up with Net Profit. Net profit is the amount you actually MAKE. So there are no more costs coming out of Net Profit. However, you (as a business owner) would not be doing a very good job if you did not keep track of your Gross Profit. Most companies have a certain percentage that they like to hit. Too high of a Gross Profit is price gouging (and may price yourself out of the market) and too low and you will go out of business. Gross Profit, THAT is where you make adjustments and then add to the price (might have to bump it up to $1.10 gal if tax rate jumps from say 20% to 30%). that is where the costs get passed on.
(please please accountants, this is the cliff note version, and very simplified. don't jump all over me)