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Gross Income

What is Gross Income?

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.

What is the difference between Gross Income and Net Income?

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

Thereupon,

The Gross income = US $ 200,000

But the expense on Sales & Marketing = US $ 5,000

Now,

The Net Income = US $ 195,000

Related: Gross Amounts, Gross Wages, Gross Pay, Gross vs. Net Income