Gross Income Calculation

1. UNIT 1:
GROSS INCOME

2. 26-2
Compute gross earnings using different pay
plans.
Find the gross pay per paycheck based on salary.
Find the gross pay per weekly paycheck based on
hourly wage.
Unit Outcomes:

3. GROSS INCOME
• An individual's total personal income before taking taxes or deductions
into account.
• Your gross income is how much you make before taxes. It is the figure
people are looking for when they ask how much you gross a month.
• A company's revenue minus cost of goods sold. Also called "gross
margin" and "gross profit."
• This is an important number when analyzing a company, it indicates
how efficiently management uses labor and supplies in the production
process.

4. GROSS INCOME CONT.
It includes all income from whatever source (unless exempt
from tax by law) including, but not limited to, the following
items;
• Compensation (fees, salaries & wages, commissions)
• Gross Income derived from the conduct of trade or business or the
exercise of a profession
• Gains from dealings in property
• Interests, Rents, Royalties, Dividends, Annuities, Prizes and
winnings, Pensions
• Partners’ distributive share from the net income of general
professional partnership

6. 26-6
Computing Net Pay
Gross Earnings - Deductions = Net Pay

7. CLASSIFICATION OF GROSS
COMPENSATION INCOME
 Basic Salary or Wage
 Honoraria
 Fixed or variable allowances
 Commission
 Fees
 Tips and gratuities
 Hazard or emergency pay
 Retirement pay
 Separation pay
 Pension
 Vacation and sick leave
 Thirteenth month pay and
other benefits
 Fringe benefits
 Overtime pay
 Profit sharing
 Awards for special services
 Beneficial payments
 Other forms of compensation

8. FINDING GROSS PAY
PER PAYCHECK BASED ON SALARY
Pay periods
• Weekly: once a week or 52 times a year.
• Biweekly: every two weeks or 26 times a year.
• Semimonthly: twice a month or 24 times a
year.
• Monthly: once a month or 12 times a year.
• Hourly: no. of hours worked.

9. FIND THE GROSS
EARNINGS PER PAY PERIOD
• Nicole earns $36,000 a year. If she is paid on
a weekly basis, what is her gross pay per
week?
• Divide $36,000 by 52 pay periods.
• $692.31
• What if she is paid on a semimonthly basis?
• $1,500.00

10. TRY THESE EXAMPLES
Find the gross earnings for:
• Carolyn, who earns $15,000 a year and is paid
weekly.
• $288.46
• Martha, who earns $48,000 a year and is paid
biweekly.
• $1,846.15
• Bill, who earns $35,000 a year and is paid
semimonthly.
• $1,458.33

11. JARGONS TO REMEMBER
Employee A person who works for others for compensation.
Employer A person or company that hires employees.
Salary A set amount of money an employee receives each pay period
regardless of the hours worked.
Minimum Wage The lowest pay rate allowed by law for each hour of work.
Pay Period A length of time for which an employee’s wages are calculated.
Weekly, bi-weekly, semi-monthly, monthly, Hourly.
Biweekly An employee is paid every other week (26 pay periods per year).
Monthly An employee is paid once per month (12 pay periods per year).
Semimonthly An employee is paid twice per month (24 pay periods per year).
Weekly An employee is paid once per week (52 pay periods per year).
Hourly Pay The employee receives an hourly wage for hours worked.
Per Diem Per Day.
Gross Pay The amount of money earned during a pay period before deductions