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How to Calculate Gross Income.
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How to Calculate Gross Income.

Rosemary Njeri

Gross income measures total income and revenue from all sources. Individuals determine gross income based on total wages or salary before any tax deductions whereas, for a business it is calculated the revenue earned from the sale of goods and services minus the cost of goods.

Formula to calculate gross income for an individual.

Calculate Gross Income.

Example 1:

Walter O’Brien is an employee in company. He is paid a salary of $ 600 every month, he pays rent worth $ 300 every month and he has an investment where he gets $ 60 as dividends every month. He has no other source of income. Determine his gross income.

Calculate Gross Income.

Thus, Walter’s gross income is $ 960.

Formula to calculate gross income for a business.

Calculate Gross Income.

Example 2:

Company X made a total revenue of $ 500,000 in a certain financial period. The cost of goods sold was $ 200,000. Determine the company’s gross income.

Calculate Gross Income.

Therefore, the company’s gross income is $ 300,000.

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