Gross Earnings

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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.

BREAKING DOWN '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.

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