Question

Why do you think " Gross versus Net" became such a big issue in accounting?

Answer 1

Gross and Net are two different concept in the financial accounting.

Lets first discuss Gross

Gross in the accounting field means it includes all the deduction which are needs to be done to reach its Net value.

For Example -

Gross Property Plant and Equipment - This line item contains all the fixed assets acquired by the company and all the assets under this catagory can be booked at the cost.

Gross Revenue - This line item inclusive of returns and allowances to be deduct to get the net value

Gross Profit - This is the difference between Sales and Cost of goods sold which is basically known as the gross margin of the company.

Net on the other hand is the value which are derived after deduction has been made to gross figure.

For Example -

Net Property Plant and Equipment - Net Property Plant and Equipment will be derived after deducting Depreciation or accumulated depreciation.

Net Revenue - Net revenue is the figure after we deducting all the expenses from the expense from the gross profit.