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General Financial Literacy State Practice Test

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Which term describes your total earnings before deductions?
Correct Answer:
Gross income
Explanation:
Gross income represents all earnings before any deductions. It includes wages, salaries, bonuses, and other income before payroll taxes and benefits are subtracted. For example, if your earnings for a month are $3,500 before withholdings, that $3,500 is your gross income. Net income is what remains after deductions; take-home pay is the amount you actually receive after withholdings; disposable income is the money available to spend after taxes. So the term that describes total earnings before deductions is gross income.

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