What it is:
How it works (Example):
Let's assume restaurant chain XYZ sold $1 million worth of food last. The cost of that food was $330,000. Thus, the company's gross earnings are $1 million - $330,000 = $670,000.
Why it Matters:
Gross earnings do not exclude the cost of goods sold, general and administrative expenses, or other costs (those are typically incorporated in thecalculation).
For individuals, gross earnings are not the same as taxable income. For example, if John used $250 of his $1,000 a week to invest in his 401(k) plan, his gross earnings would be $1,000 but his taxable income would be $750.