What is the difference between gross income and net income? Select the best answer.
Understand the Problem
The question is asking for the distinction between gross income and net income, specifically requesting the best definition among multiple-choice answers.
Answer
Net income is wages, salaries and other earnings minus all tax and deductions
Net income is wages, salaries and other earnings minus all tax and deductions
Answer for screen readers
Net income is wages, salaries and other earnings minus all tax and deductions
More Information
Net income is often referred to as take-home pay. It is the amount of money left after subtracting all taxes, deductions, and expenses from gross income.
Tips
A common mistake is confusing gross income and net income, particularly in business finance, recognizing that gross income is before deductions, whereas net income is after all deductions.
Sources
- What's the Difference Between Gross Income vs Net Income? - TurboTax - turbotax.intuit.com
- Gross vs Net Income: Differences and How to Calculate - Paychex - paychex.com
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