What does the term 'cost' refer to in a retail business?

In a retail business, the term 'cost' primarily refers to the amount paid to acquire products. This is a fundamental aspect of retail operations, as it encompasses the purchase price paid to suppliers or manufacturers to obtain the goods that will later be sold to consumers. Understanding the cost of products is crucial for retailers because it directly impacts profit margins.

When retailers know their acquisition costs, they can set appropriate selling prices to cover expenses and achieve desired profits. This definition of 'cost' strictly relates to the goods' procurement and does not encompass the revenues generated from sales or other business expenses. Hence, distinguishing the cost from revenue or profit is essential for sound financial management in retail.

The other options relate to different financial concepts: the amount received from customers pertains to revenue, overall expenses reflect broader financial obligations beyond just product costs, and the price consumers pay for products aligns with retail pricing strategies rather than the core definition of cost.