Which term describes a person's income before any deductions?

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Study for the SkillsUSA Professional Development Program (PDP) Test. Prepare with flashcards and multiple choice questions, each question has hints and explanations. Get ready for your exam!

Multiple Choice

Which term describes a person's income before any deductions?

Explanation:
Income before any deductions is gross income. Gross income measures the total amount earned from wages, salaries, bonuses, and other earnings prior to withholding taxes, retirement contributions, insurance, and other deductions. Net income, by contrast, is what remains after those deductions and is typically called take-home pay. While salary and wages describe the form of compensation, they don’t by themselves specify the amount before deductions. For example, a paycheck might show $4,000 as gross earnings and $3,000 as net pay after deductions.

Income before any deductions is gross income. Gross income measures the total amount earned from wages, salaries, bonuses, and other earnings prior to withholding taxes, retirement contributions, insurance, and other deductions. Net income, by contrast, is what remains after those deductions and is typically called take-home pay. While salary and wages describe the form of compensation, they don’t by themselves specify the amount before deductions. For example, a paycheck might show $4,000 as gross earnings and $3,000 as net pay after deductions.

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