What is the difference between gross income and net income? Select the best answer.

Question

A. Gross income is the total amount of annual salary minus federal income tax.
B. All wages and other earnings minus mandatory deductions
C. Net income is wages, salaries and other earnings minus all tax and deductions
D. Wages minus voluntary deductions

Answer 1

The best answer is: C. Net income is wages, salaries and other earnings minus all tax and deductions.

Gross income refers to the total income earned before any deductions (like taxes and other deductions), while net income is what remains after those deductions are taken out.