Answer
Gross income is total earnings of an individual or an entity. Gross income is the amount that is calculated without any deductions.
Work Step by Step
Gross income is the total earnings of an individual. It is the total amount without any deductions. Deductions can be in the form of income tax, exemptions, and adjustments.
Example: A person earns $40 per hour and works for 20 hours per week. Calculate gross income.
In order to calculate gross income, multiply earnings of an hour with working hour per week.
\[\begin{align}
& \text{Gross}\,\text{income}=\text{Earnings}\,\text{per}\,\text{hour}\times \text{Workings}\,\text{per}\,\text{week} \\
& =\$40\times\$20\\&=\$800\end{align}\]
Hence, gross income of the person is \[\$800\].
In case of a business, cost of goods is deducted from the net sales to take out the gross income of the manufacturer.
