How is gross income defined?

How is gross income defined?

• A. Income after taxes and deductions
• B. All earnings before taxes and deductions
• C. Net earnings after expenses
• D. Income from investment only

Answer: (B)

Gross income is defined as all earnings before taxes and deductions. This encompasses the total income earned by an individual or business from various sources, including salaries, wages, bonuses, rental incomes, and dividends, without accounting for any expenses or taxes. It represents the full picture of one's financial inflow before any governmental taxes or personal expenses are deducted, making it a crucial figure in financial analysis and planning. The other definitions provided do not accurately represent gross income. For instance, income after taxes and deductions represents net income, which is the amount available to an individual after all obligatory deductions have been made. Net earnings after expenses similarly reflect profit and not the total income prior to any deductions. Income from investments only refers to a subset of potential earnings and does not account for other income sources, thereby missing the broader scope of gross income.

Gross income is defined as all earnings before taxes and deductions. This encompasses the total income earned by an individual or business from various sources, including salaries, wages, bonuses, rental incomes, and dividends, without accounting for any expenses or taxes. It represents the full picture of one's financial inflow before any governmental taxes or personal expenses are deducted, making it a crucial figure in financial analysis and planning.

The other definitions provided do not accurately represent gross income. For instance, income after taxes and deductions represents net income, which is the amount available to an individual after all obligatory deductions have been made. Net earnings after expenses similarly reflect profit and not the total income prior to any deductions. Income from investments only refers to a subset of potential earnings and does not account for other income sources, thereby missing the broader scope of gross income.