Gross

Gross Income Gross Sales Merchandise Quantity Financial Terms Accounting Business
The term 'gross' can refer to the highest amount of sales or income before deductions, or to a quantity in merchandise, specifically 12 dozen or 144 items.
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Definition

Gross is a term used in business and finance with two primary meanings:

  1. Gross (Finance and Accounting): Refers to the total amount of revenue or income generated before any deductions such as taxes, expenses, or allowances. For instance, gross income is the total income earned by an individual or business before taxes and other deductions.

  2. Gross (Merchandise Quantity): In the context of merchandise, “gross” represents a quantity of 12 dozen, which equals 144 items. This unit of measure is often used in wholesale and bulk transactions.

Examples

Example 1: Gross Income

A company’s gross income for the year is $500,000. This figure represents total revenue before any deductions such as operating expenses, taxes, and other liabilities.

Example 2: Gross Merchandise

A supplier ships a gross of widgets to a retailer. Since one gross equals 144 items, the retailer receives 144 widgets.

Frequently Asked Questions (FAQ)

What is the difference between gross and net income?

  • Gross income is the total revenue or income before any deductions. Net income is the income remaining after all expenses, taxes, and deductions have been subtracted from the gross income.

How do you calculate gross income?

  • Gross income can be calculated by summing all the income sources before any deductions. For businesses, this includes total revenue from sales before deducting expenses such as cost of goods sold (COGS), salaries, rent, and utilities.

What does a gross quantity mean in wholesale?

  • In wholesale contexts, a gross quantity refers to 12 dozen or 144 items. It is often used for bulk products to streamline ordering and inventory processes.

Is gross income the same as gross profit?

  • No, gross income and gross profit are not the same. Gross profit specifically refers to the amount left after subtracting the cost of goods sold (COGS) from total sales revenue. Gross income encompasses all forms of income before deductions.
  1. Net Income: The total income after all deductions, expenses, taxes, and other liabilities have been subtracted from the gross income.
  2. Total Revenue: The complete amount of money received by a company from its business activities, before subtracting any expenses.
  3. Gross Profit: The financial gain calculated by deducting the cost of producing and selling goods from total sales revenue.
  4. Gross Margin: The ratio of gross profit to total revenue, expressed as a percentage.

Online References

Suggested Books for Further Studies

  1. “Financial Accounting: Tools for Business Decision Making” by Paul D. Kimmel, Jerry J. Weygandt, and Donald E. Kieso.
  2. “Principles of Accounting” by Belverd E. Needles Jr. and Marian Powers.
  3. “Intermediate Accounting” by Donald E. Kieso, Jerry J. Weygandt, and Terry D. Warfield.
  4. “Accounting Made Simple: Accounting Explained in 100 Pages or Less” by Mike Piper.

Fundamentals of Gross: Accounting Basics Quiz

### What does the term "gross" usually refer to in finance? - [x] Total revenue before deductions - [ ] Revenue after all expenses - [ ] Net income - [ ] Taxable income > **Explanation:** In finance, "gross" typically refers to the total revenue before deducting any expenses, taxes, or allowances. ### What quantity does a gross represent in merchandise terms? - [ ] 12 items - [ ] 120 items - [x] 144 items - [ ] 100 items > **Explanation:** In merchandising, a gross is a quantity representing 12 dozen, which equates to 144 items. ### How do you calculate gross income? - [x] Sum all income sources before any deductions - [ ] Subtract expenses from total revenue - [ ] Only include revenue from sales - [ ] Add taxes to net income > **Explanation:** Gross income is calculated by summing all sources of income before any deductions or expenses. ### What is the key difference between gross and net income? - [ ] Gross income includes taxes - [ ] Gross income subtracts operating expenses - [ ] Gross income is after all deductions - [x] Gross income is before all deductions > **Explanation:** The key difference is that gross income is calculated before any deductions, whereas net income is after all deductions. ### In financial statements, where is gross profit usually found? - [ ] In the operating expenses section - [ ] At the bottom of the income statement - [x] Near the top after revenue - [ ] In the balance sheet > **Explanation:** Gross profit is typically found near the top of an income statement, following total revenue and cost of goods sold. ### Which ratio represents the relationship between gross profit and total revenue? - [ ] Gross Margin - [ ] Operating Margin - [ ] Net Margin - [x] Gross Margin > **Explanation:** Gross Margin is the ratio that represents the relationship between gross profit and total revenue, expressed as a percentage. ### If a retailer buys a gross of books, how many books did they purchase? - [ ] 12 - [ ] 120 - [x] 144 - [ ] 100 > **Explanation:** A gross is 12 dozen, equating to 144 books. ### Why is understanding gross income important for businesses? - [ ] It determines the amount of taxable income - [x] It helps understand total revenue before deductions - [ ] It indicates total expenses - [ ] It calculates net income > **Explanation:** Understanding gross income is crucial as it reflects total revenue before any deductions and helps in financial planning and analysis. ### What is one reason businesses calculate gross profit? - [x] To evaluate profitability of goods sold - [ ] To assess net income - [ ] To calculate taxes owed - [ ] To estimate operating expenses > **Explanation:** Businesses calculate gross profit to evaluate the profitability of goods sold by subtracting the cost of goods sold from total revenue. ### What financial term is similar in function but depends on deductions, unlike gross? - [ ] Total Revenue - [ ] Operating Income - [ ] Gross Margin - [x] Net Income > **Explanation:** Unlike gross, net income depends on deductions including all expenses and taxes, providing a true reflection of financial performance.

Thank you for exploring the comprehensive definitions and examples of “Gross” in various contexts, paired with our insightful quiz for a deeper understanding. Dive into more financial terms to enhance your business acumen!

Wednesday, August 7, 2024
Gross Amount
Grievance
Dividend In Specie January 1, 1
In Arrears January 1, 1
Net Sales January 1, 1
Obligation January 1, 1
Payment in Advance January 1, 1
Principal January 1, 1
Realized Profit/Loss January 1, 1
Surcharge January 1, 1

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