GROSS INCOME FROM

BUSINESS

REPORTER:
EVICA B. TOLIBAS AND ROGEN PIRANTE
Compute gross income from business

• Step 1: Find out the total revenue of the business.

• Step 2: Find out the cost of goods sold for the business.
• Step 3: Calculate using the formula:

 Gross Income = Total Revenue – Cost of Goods Sold.

Example:

Griggles Inc. is engaged in the manufacturing of shoes. The company’s Chief

Financial Officer (CFO) digs into the financials and obtains certain data. Its gross
revenue is $1,00,000. Also, it incurs the following expenses

Solution:
• Direct Labor: 10000
• Raw Material Cost: 20000
• Packaging: 5000
• Transportation Costs: 6000
• Revenue: 100000
• Calculation of Cost of Goods Sold

10,000 + 20,000 + 5,000 + 6,000

•Cost of Goods Sold = 41,000
• Therefore, the calculation is as follows,

= $1,00,000 – 41,000 = 59,000.

PASSIVE INCOME
-Income that comes from the activities in which you do
not participate actively.

-or unearned income, as the 

Internal Revenue Service (IRS) calls it—is income that requires
minimal effort to obtain. It is the opposite of active income,
which is income received from a job or business venture that
requires active participation.
OTHER SOURCES OF INCOME:

• Earned Income.
• Profit Income.
• Interest Income.
• Dividend Income.
• Rental Income.
• Capital Gains Income.
• Royalty Income.
EARNED INCOME
-includes all income from employment, but only if it is
includable in gross income.
PROFIT INCOME
-Profit refers to the difference between how much
money is spent and earned in a given time period, while
income represents the actual amount of money earned in a
given time period.
INTEREST INCOME
- is the amount paid to an entity for lending its money
or letting another entity use its funds
DIVIDEND INCOME
-is paid out of the profits of a corporation to the stockholders.
It is considered income for that tax year rather than a capital gain.
RENTAL INCOME
- is any payment you receive for the use or occupation of
property. Expenses of renting property can be deducted from your
gross rental income.
CAPITAL INCOME
-This is income received from the sale of non-current assets of
the business.
CAPITAL GAINS INCOME
- are profits from the sale of a capital asset, such as
shares of stock, a business, a parcel of land, or a work of art.
ROYALTY INCOME
-The amount someone pays you to use your property,
after you subtract the expenses you have for the property.