ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -Annual income is the total value of income earned during a fiscal year. Gross annual income refers to all earnings before any deductions are made, and net annual income refers to the amount that remains after all deductions are made.

Detailed explanation-2: -Gross pay is an individual’s total earnings throughout a given period before any deductions are made. Deductions such as mandated taxes and Medicare contributions, as well as deductions made for company health insurance or retirement funds, are not accounted for when gross pay is calculated.

Detailed explanation-3: -Earnings before tax, or pre-tax income, is the last subtotal found in the income statement before the net income line item. The EBT metric is found after all deductions – except taxes – that have been made against sales revenue. These deductions include COGS, SG&A, depreciation and amortization, and interest expense.

Detailed explanation-4: -The main difference between the two is that pre-tax income is the total amount of money earned before taxes are taken out, while taxable income is the amount of money earned after taxes have been deducted.