Differences between Gross and Net

In the field of economics, it is very common to mention the words -gross- and -net- as measurement indicators used to calculate some economic magnitudes.

It is important to know how to differentiate both concepts because their usefulness and application are different. When it comes to paying a salary, establishing salaries within a contract, calculating the value of a product or a production, difficulties generally arise in understanding them because the real definition, application or meaning is not known. of the terms mentioned.

For this reason, it is intended in this article to establish the most relevant differences between each of them in order to dispel the possible doubts that the reader may have. Before going on to point out the differences and by way of clarifying terms, it is necessary to define each of these terms:

Stupid

When speaking of gross amount, reference is made to the total value of something. That is, without applying any type of differences, discounts or costs, as the case may be. The gross amount applies to salaries, profit margin, weights of items or products, among others.

Although this definition was not enough, we are going to specify its meaning more clearly through two examples.

Example 1: The gross salary of a worker is the total agreement in money that he will earn for his work, without subtracting discounts for insurance concepts, retirement contributions, legal discounts, among others.

Example 2: The gross weight of a product is the total weight of the article, that is, the weight of the article plus the weight of the container or packaging in which said article is presented.

Net

When speaking of net, reference is made to the resulting value of -something- when discounts or specific amounts have been applied to it. This applies, for example, to a salary, product, production, equity, among others. This definition, like the previous one, is explained below, through two clear examples:

Example 1: The net salary of a worker is what he receives after applying the legal discounts and after adding contractual benefits such as premiums or extra bonuses for seniority, overtime worked, professionalization, among others.

Example 2: The net weight of a product is the actual weight of the item without considering the weight of the container or packaging in which it is presented.

Next we will summarize the differences between gross and net in the following table:

Stupid Net
Gross value refers to the total or integer value of something like the gross cost of an item, a gross salary, gross weight, etc. Net worth refers to the actual or cash value of something like the net cost of an item, a net salary, net weight, etc.
The gross cost does not take into account deductions or amounts of operating expenses, packaging, production or law as the case may be. The net cost is obtained from the difference of the gross cost and the deductions, packaging, amounts as the case may be.
The gross value of something can generally be obtained from the sum of all the values ​​associated with the production, packaging, deductions, of that something, as the case may be. The net value of something can be obtained by subtracting the gross value minus the amounts, packaging, deductions associated with that something, as the case may be.

Related Articles

Leave a Reply

Your email address will not be published. Required fields are marked *

Back to top button