Deidre owns a pet store. Last month, her income was $5,500, her cost of goods was $800, and her total expenses were $2,600. What are Deidre's net income and gross income for last month?

Deidre owns a pet store. Last month, her income was $5,500, her cost of goods was $800, and her total expenses were $2,600. What are Deidre's net income and gross income for last month?

• A. Net income = $3,100 and Gross income = $4,700
• B. Net income = $2,100 and Gross income = $4,200
• C. Net income = $4,700 and Gross income = $2,100
• D. Net income = $2,100 and Gross income = $4,700

Answer: (D)

Gross income represents the money earned from sales after accounting for the cost of goods sold, while net income is what remains after all other expenses are subtracted. Here, revenue is 5,500 and cost of goods sold is 800, so gross income = 5,500 − 800 = 4,700. Then subtract total expenses of 2,600 from the gross income: 4,700 − 2,600 = 2,100. So Deidre’s last-month net income is 2,100 and gross income is 4,700.

Gross income represents the money earned from sales after accounting for the cost of goods sold, while net income is what remains after all other expenses are subtracted.

Here, revenue is 5,500 and cost of goods sold is 800, so gross income = 5,500 − 800 = 4,700. Then subtract total expenses of 2,600 from the gross income: 4,700 − 2,600 = 2,100. So Deidre’s last-month net income is 2,100 and gross income is 4,700.