Do YOU know the difference?
There are plenty of economic terms you may come across while reading the news or discussing economic issues with your friends. However, a great number of these terms are often misused or simply not understood by the general public.
If you want to be one of those who can use these terms properly, the only thing you need to do is to follow our series on Easily Confused Economic Terms!
GROSS and NET
refer to two completely different sets of amounts. Generally speaking, GROSS refers to the whole of something (before anything is deducted) while NET refers to a part of the whole (the amount left over after all the deductions are made).
In the context of business accounting:
GROSS INCOME refers to all revenue that a company earns (including cash, checks, credit charges, rents, interest and dividends)
NET INCOME refers to gross income minus business expenses.
In the context of salary:
GROSS SALARY refers to the amount agreed between you and your employer (before any deductions are made).
NET SALARY is your take-home pay, i.e. the amount you actually take home after tax is deducted.
In the context of weight:
GROSS WEIGHT refers to the weight of the product + packaging
NET WEIGHT refers to the weight of the product (without packaging)
And now, take this quick Quiz to practice what you have learned!
Gross vs. Net
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GROSS or NET? What’s the difference?
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Question 1 of 5
1. Question
……………… income is the amount that a business earns from the sale of goods or services, before tax, and other expenses have been deducted.
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That’s right!
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It’s quite the opposite: gross income
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Question 2 of 5
2. Question
If a person earns $2,000 and $200 in deductions are taken from his paycheck, his net income is $………………
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That’s correct!
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It’s $1,800 (2,000-200)
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Question 3 of 5
3. Question
When people ask “what’s your salary”, they actually mean to ask: “what is your …………….. SALARY”? (= your take home pay)
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That’s correct!
Incorrect
take-home pay = NET salary
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Question 4 of 5
4. Question
Net income is the final amount (………………. or loss) after all expenses are deducted.
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That’s right!
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The terms net income refers to profit OR loss
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Question 5 of 5
5. Question
……………. weight refers to the total weight of goods and its packaging.
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That’s correct!
Incorrect
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