What does the term "gross income" mean?

The term "gross income" refers to the total income received by an individual or entity before any deductions, such as taxes or expenses, are taken into account. This includes wages, salaries, bonuses, and any additional earnings from investments or other sources before any reductions are applied. Understanding the concept of gross income is crucial in financial reporting and budgeting, as it provides a clear picture of total earnings and potential cash flow, which can be important for both personal finance and business operations.

The other options define different financial terms; for instance, “income after taxes” refers to net income, which is gross income minus taxes. “Income earned from investments” is typically categorized as investment income, a narrower definition focused solely on earnings from investments, rather than total earnings from all sources. Finally, “total profit after expenses” describes net profit, which is derived from gross income after accounting for all business expenses. Thus, gross income serves as a foundational concept in understanding overall earnings.