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Gross income measures the profit generated from sales alone, using your total revenue minus the cost to of the goods you sold. Find out how net come is different. Gross vs. Net Income ...
For example, net income is the total income of a company after deducting its expenses—commonly known as profit—or the total income of an individual after deducting their income tax. Profit may be broken down further into pre-taxed or gross profit and profit after taxes or net profit.
It is opposed to net income, defined as the gross income minus taxes and other deductions (e.g., mandatory pension contributions). For a business, gross income (also gross profit , sales profit , or credit sales ) is the difference between revenue and the cost of making a product or providing a service, before deducting overheads , payroll ...
Often, the term income is substituted for net income, yet this is not preferred due to the possible ambiguity. Net income is informally called the bottom line because it is typically found on the last line of a company's income statement (a related term is top line, meaning revenue, which forms the first line of the account statement).
Gross Income vs. Net Income While the term “net income” is often used to describe a business’ profit, you can also use net income to describe your personal income.
Gross margin can be expressed as a percentage or in total financial terms. If the latter, it can be reported on a per-unit basis or on a per-period basis for a business. " Margin (on sales) is the difference between selling price and cost.
In U.S. business and financial accounting, income is generally defined by Generally Accepted Accounting Principles (GAAP) and the Financial Accounting Standards Board as: Revenues – Expenses; however, many people use it as shorthand for net income, which is the amount of money that a company earns after covering all of its costs as well as taxes.
Revenue is a crucial part of financial statement analysis. The company's performance is measured to the extent to which its asset inflows (revenues) compare with its asset outflows . Net income is the result of this equation, but revenue typically enjoys equal attention during a standard earnings call. If a company displays solid "top-line ...