What Are Gross Receipts?

Gross receipts estimate business income from all sources.
Gross receipts estimate business income from all sources. (Image: Szepy/iStock/Getty Images)

Accountants often use terms like gross receipts, gross sales, and net profit when referring to business transactions. Gross receipts represent business income from all sources, without considering costs and expenses. This contrasts with net receipts, a figure determined by subtracting costs and expenses from gross receipts.

Gross Receipts Defined

Gross receipts represent the total amount a business receives from all sources before subtracting any costs or expenses -- including sales returns. In contrast to gross sales, gross receipts include not only sales from products and services, but all monies from rental income, penalties charged to customers and interest income. After determining gross receipts, a business can subtract expenses to arrive at net profit.

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