Gross and

Net Earnings
 OBJECTIVES
In this lesson, the students will be
able to:
1.Define salary and earnings,
2.Differentiate gross from net, and
3.Compute gross and net earnings.
 DEFINITION
• Gross Earning is the amount earned by any
person before subtracting the taxes, benefits,
loans, and other possible deductions.
• Net Earning is the amount earned by any person
less the total reductions.
• Deduction is the amount held by any authority as
a form of payment for some necessary dues like
taxes, loans, etc.
• Salary is a fixed regular payment, typically paid
on a monthly or biweekly basis but often
expressed as an annual sum, made by an
employer to an employee.
Consider the problem:
For his salary in the previous month, Mr. Fabella
received the payslip below:
TOTAL EARNINGS ₱40,947.51
TOTAL DEDUCTIONS ₱11,676.35
MONTHLY NET ₱29,271.16
1ST HALF NET ₱14,635.58
2ND HALF NET ₱14,635.58

By looking closer into the figures, one can notice that

₱40,947.51 - ₱11,676.35 = ₱29,271.16
With this, we get
Gross – Deduction = Net
In Mr. Fabella’s payslip, it can be noticed
that the words “total earnings”,
“deductions”, and “net” appeared. “Total
Earnings” is also known as “Gross or
gross earning”. It is the amount gained by
the worker without any deductions. When
we say “net”, it is the payment received less
deductions of any employee.
Let E be the total earnings, D be the total
deduction and N be the monthly net. The
equation

Holds for all nonnegative numbers E, N, and D.

The algebra suggest the following formula: