Gross profit is sales less cost of sales. Sales are self explanatory while cost of sales is the cost that is directly attributable to the sales. Thing of it this way, if I was to stop selling tomorrow morning, what expenses would I no longer incur. Purchases, wages, electricity?, heating, telephone?, etc, etc. Administration expenses such as Insurance, rates, accountancy, electricity?, telephone?, bank charges, bank interest, would still be incurred no matter if you cease selling or not, therefore these cannot form part of your GP calculation as they are not a cost of sale.
However, saying all that and as Brendan has already eluded to, some people including accountants do not always apply the strict accountancy rules in calculating the GP. So beware and always ask what does GP include?
Patrick