Ben owns a print shop. Last quarter, income was $8,000, cost of goods sold was $650, and total expenses were $4,300. What are Ben's net income and gross income for the last quarter?

• A. Net income = $3,050 and Gross income = $7,350
• B. Net income = $7,350 and Gross income = $3,050
• C. Net income = $3,500 and Gross income = $7,300
• D. Net income = $3,000 and Gross income = $7,500

Answer: (A)

Gross income (gross profit) is what you have left from sales after subtracting the cost of goods sold, and net income is what remains after subtracting all other expenses from that gross profit. Start with the revenue: 8,000. Subtract the cost of goods sold: 8,000 − 650 = 7,350, which is the gross income. Then subtract total expenses: 7,350 − 4,300 = 3,050, giving the net income. So the last quarter shows net income of 3,050 and gross income of 7,350. The other options don’t line up with the same arithmetic; for example, a gross income of 7,300 would imply a COGS of 700, which isn’t given, and a net income of 3,000 would require different expense totals.