The Differences between Net and gross is given here. It is common to hear about the terms gross and net, especially in salaries in the accounts of a company or in macroeconomic data. They measure the same magnitudes, but they are different concepts and it is necessary to know how to distinguish them to avoid confusing them. These are quantitative expressions used to calculate economic magnitudes.
It is a final amount after making changes to the gross amount. It occurs in most cases when a discount is made. That is to say:
Net = Gross – discount
It is the final amount, therefore we can find net salary, net sales, and net internal product.
The net salary is the salary that the worker receives after taxes and Social Security contributions have been deducted.
The net salary is:
Net salary = Gross salary – Taxes – Social Security
The net profits of a company are those profits to which, in addition to subtracting the sales costs, taxes, interest, general expenses of the company, and depreciation from sales profits.
Net profit = Gross profit – taxes – interest – depreciation – overhead
It is the total amount generated by an economic activity such as wages, sales, or the gross domestic product of a country.
The gross salary is the salary offered by the employer and on which we must negotiate to take into account all discounts.
In the results or profits of the company we have the gross profit, which is nothing more than the difference between the total sales and the cost of these sales.
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Differences between Net and gross
- The term net refers to the profit or total after subtracting from a total all those factors necessary to obtain a much more real total. For example, we speak of net salary when tax and social security are subtracted from the total salary.
- The term gross refers to a total profit obtained directly from subtracting benefits-costs. It is a value that still needs to be refined and adjusted.