Hello everybody,

today I want to leave a note on gross income and net income from two standpoints: business and employee.

Gross income = Total sales - Cost of goods sold

Net Income = Total sales - Cost of goods sold - Selling expenses. 

Because Gross income = Total sales - Cost of goods sold quite often Net income is recorded in this form:

Net Income = Gross income - Selling expenses

If some business had 1 000 000 $ sales and cost of goods sold is 600 000 $ and selling expenses are 250 000 then

Gross income = 1 000 000 - 600 000 = 400 000

Net Income = 400 000 - 250 000 = 150 000

But if you are an employee, then for you differnet definitions are applied.

Gross income = all salary without any deductions

Net income = what left for employee.

If a person has salary 1000, and 300 of deductions of taxes then his net income is 700 ( his selling expenses considered to be equal zero )