Question

What is the difference between gross earnings and net earnings? Use in your own words.

Answer 1

The difference between gross earnings and net earnings is gross earnings are more likely to be closely related to the result of the operation, while a net income includes many variety of expenses, gains, and losses. Both being analyzed differently.

Answer 2

The main flaw in the use of gross and net income for a business is that the gross income figure is more likely to be closely related to the results of operations, while net income can include a variety of non-operational expenses, gains, and/or losses. Thus, the two calculations are based on different sets of information, and are used in different types of analysis.