Gross Earnings

AAA

DEFINITION of 'Gross Earnings'

1. For individuals, the total income earned in a year, as calculated prior to any tax deductions or adjustments.

2. For public companies, gross earnings is an accounting convention, referring to the amount of initial profit left over from total revenues for a specified time period, once cost of goods sold have been deducted.

INVESTOPEDIA EXPLAINS 'Gross Earnings'

1. For example, consider John who earned a total of $50,000 for the recently completed fiscal year, and made $5,000 of contributions to a government-sponsored savings plan. Because his contributions reduce his taxable earnings, John is allowed to base his tax calculations off taxable earnings of $45,000, while his actual gross earnings for the year are $50,000.

2. A company's gross earnings are reported periodically on its income statement. The first line of the income statement reports a company's total sales for a given time period. When cost of goods sold (COGS) is subtracted from this number, the remaining difference is referred to as the company's gross earnings.

RELATED TERMS
  1. Income

    Money that an individual or business receives in exchange for ...
  2. Gross Profit

    A company's revenue minus its cost of goods sold. Gross profit ...
  3. Adjusted Gross Income - AGI

    A measure of income used to determine how much of your income ...
  4. Gross Income

    1. An individual's total personal income before taking taxes ...
  5. Income Statement

    A financial statement that measures a company's financial performance ...
  6. Cost Of Goods Sold - COGS

    The direct costs attributable to the production of the goods ...
RELATED FAQS
  1. Does everyone have to file a federal tax return?

    This may come as a surprise to many individuals, but not everyone needs to file a federal tax return. According to the IRS, ... Read Full Answer >>
  2. The company I am working for said that 401(k) contribution can be based on only straight ...

    The regulation (law) that addresses your specific question has not changed. However, both employers may be right. Here's ... Read Full Answer >>
Related Articles
  1. Options & Futures

    Find Investment Quality In The Income Statement

    Use these key attributes to uncover top-level investments.
  2. Forex Education

    Understanding The Income Statement

    Learn how to use revenue and expenses, among other factors, to break down and analyze a company.
  3. Taxes

    10 Money-Saving Year-End Tax Tips

    Getting organized well before the deadline will curb your frustration and your tax liability.
  4. Investing

    What's a Run Rate?

    Run rate is a term used to denote annualized earnings extrapolated from a shorter time frame. Management uses the run rate to estimate future revenues.
  5. Professionals

    Financial Accounting

    Financial accounting is the process of gathering, recording, summarizing and reporting financial data relating to a business. The ultimate goal is to accurately report the financial picture and ...
  6. Investing

    What are Direct Costs?

    Direct costs for finished goods refer to the items and services directly used in production. Other costs such as rent and insurance for the production site are indirect costs. These costs may ...
  7. Investing

    What is Contingent Liability?

    A contingent liability is an amount that might have to be paid in the future, but there are still unresolved matters that make it only a possibility. Lawsuits and the threat of lawsuits are the ...
  8. Investing

    What's Accrued Interest?

    Accrued interest has two meanings. In accounting, it is interest that has been earned, but the time for payment has not yet occurred.
  9. Investing

    What is Absorption Costing?

    Absorption costing is an accounting method primarily used in manufacturing. In absorption costing, the cost of a manufactured product includes the direct costs plus an apportioned share of the ...
  10. Economics

    What Must The UK Do To Keep North Sea Oil Afloat?

    The UK government may need to take drastic action to ensure the viability of UK North Sea offshore oil production amid high costs and shrinking margins.

You May Also Like

Hot Definitions
  1. Income Effect

    In the context of economic theory, the income effect is the change in an individual's or economy's income and how that change ...
  2. Price-To-Sales Ratio - PSR

    A valuation ratio that compares a company’s stock price to its revenues. The price-to-sales ratio is an indicator of the ...
  3. Hurdle Rate

    The minimum rate of return on a project or investment required by a manager or investor. In order to compensate for risk, ...
  4. Market Value

    The price an asset would fetch in the marketplace. Market value is also commonly used to refer to the market capitalization ...
  5. Preference Shares

    Company stock with dividends that are paid to shareholders before common stock dividends are paid out. In the event of a ...
  6. Accrued Interest

    1. A term used to describe an accrual accounting method when interest that is either payable or receivable has been recognized, ...
Trading Center