Glossary · Also called Gross profit margin
Margin
Profit expressed as a percentage of the selling price of goods.
What it means
Gross profit stated as a percentage of revenue, showing the share of each sale that is profit.
Example
Goods costing RM200 sold for RM250 give a RM50 profit on RM250 of sales, i.e. 20%.
Why it matters
It is used to check pricing and to reconstruct sales or cost figures in incomplete-records questions.
In practice
Margin is calculated on selling price. You use it when the sales figure is known and you need to work back to gross profit or cost. If a shop sells goods for RM400 at a margin of 30%, gross profit is RM120 and cost of sales is RM280. Selling price is the largest of the three amounts, so a margin can never reach 100%. This is a quick check that you have not muddled it with mark-up.
Students often confuse margin with mark-up, which takes cost price as its base. The same RM120 profit gives a margin of 30% but a mark-up of about 42.9% (120 divided by 280).
Margin is not an account entry. It is a tool for rebuilding incomplete records. For example, to estimate closing inventory lost in a fire, apply the margin to known sales to strip out profit and reveal cost.
If you struggle to choose between margin and mark-up in an exam, one of our teachers can drill the difference with you using past-paper questions. Book a trial class.
Related terms
Syllabus reference: Cambridge 0452 and 0985, syllabus for 2027 to 2029, sub-topic 5.6 Incomplete records (page 17); sub-topic 6.1 Calculation and understanding of accounting ratios (page 18).
Definitions here are general accounting explanations for study. For your board's exact wording, see its official syllabus via Sources.
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