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3 years ago

Why is net income lower than gross income?

Business

2 answers:

cupoosta [38]3 years ago

6 0

The correct answer is C. Withholding.

Net income is termed as the net earnings, net profit, total comprehensive and bottom line.

It is entity income then you take way expenses, cost of goods sold and even taxes which are for accounting period.

Gross income is termed as gross pay and it is the total pay before the deductions are done.

It can include the services or the property which is being received.

Contact [7]3 years ago

6 0

<u>The net income is lower than the gross income because of withholdings. </u>

Further Explanation:

Gross Profit: It defined as the profit that a company earns after reducing the costs that are related to manufacturing and selling the products, or providing the services.

Net Profit: It calculated by deducting all interest, operating expenses, taxes, and dividends from a company's total revenue.

Justification for the correct and incorrect answer:

Fixed spending: This option is incorrect.

It refers to the fixed expenses that are incurred in the production and administration of the company.

Budgets: This option is incorrect.

A budget is a financial plan that estimates revenue and expenses for a specified period.

Withholdings: This option is correct.

Withholding refers to the part of an employee's wages that do not form a part of their paycheck but is directly remitted to the local tax authorities, federal or state. It reduces the net profit as it is reduced from it.

Discretionary spending: This option is incorrect.

Discretionary spending is defined as the costs that are not directly associated with operational procedures of the business.

Learn more:

1. Learn more about the resources and expenses

brainly.com/question/1890422

2. Learn more about the goal of the budget

brainly.com/question/1226004

3. Learn more about the tax on income

brainly.com/question/1617488

Answer details:

Grade: High School

Subject: Accounting

Chapter: Income statement

Keywords: Net income, gross income, fixed spending, budgets, withholdings, discretionary spending, income statement, loss, profit,

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