Explain the difference between gross income and net income.
- Junior Cycle Home Economics - Question 8 - 2005
Question 8
Explain the difference between gross income and net income.
Worked Solution & Example Answer:Explain the difference between gross income and net income.
- Junior Cycle Home Economics - Question 8 - 2005
Step 1
Gross Income
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Answer
Gross income is the total amount of money earned by an individual or entity before any deductions are made. This includes wages, salaries, bonuses, and any other sources of income, such as rental income or investment earnings.
Step 2
Net Income
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Answer
Net income, often referred to as 'take-home pay,' is the amount of money that remains after all deductions have been taken from gross income. These deductions can include taxes, retirement contributions, health insurance premiums, and other withholdings. Essentially, net income represents the actual earnings that an individual can spend or save.
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