Gross profits are the total amount of money earned by a company, employee, or contractor for a period of time. Gross income is usually calculated over a year, but companies also record it periodically. Gross profits are the sales from all sources minus the cost of goods sold by a business (COGS). It excludes other operating expenses such as payroll, office space, supplies, publicity, and advertisement, among others. Since subtracting the actual expenses of making the goods or delivering the operation, gross profits show how much money a company has earned on products/services.
Gross income and net income should not be confused with each other. The following example would clarify the concepts in a better way:
If an organization has,
Sales per month = US $ 500,000
Cost of goods sold = US $ 300,000
The Gross income = US $ 200,000
But the expense on Sales & Marketing = US $ 5,000
The Net Income = US $ 195,000