Gross Income Definition

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Gross Income Definition

Definition
Gross income is the total of all revenue coming into your business minus the cost of goods sold or COGS (with some exceptions according to the IRS rulings and the U.S. Code). The amount of gross income is the same amount as gross profit and gross margin.

Extended Definition
Gross income is computed before you can determine the amount of taxable income. Although the COGS is deducted from the total revenue when computing gross income, operating expenses like rent or insurance are not deducted.

When comparing two similar companies, gross income can be useful in recognizing which business is optimizing profitability with regard to expenses.

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