Net Definition and Legal Meaning
On this page, you'll find the legal definition and meaning of Net, written in plain English, along with examples of how it is used.
What is Net?
It refers to the balance amount left after deduction of all expenses including taxes, depreciation and costs. In most accounting terms the word net is used referring to the final figure.
History and Meaning of Net
The term "net" has been used in accounting for centuries, tracing back to the early days of commerce when traders would calculate their profits after all expenses were deducted. The definition of "net" in accounting refers to the remaining amount after all expenses, including taxes and depreciation, have been subtracted from a total revenue or gross amount. In essence, it is the final figure that represents how much money a business or individual retains.
Examples of Net
A company has a gross revenue of $100,000, but after deducting all expenses such as salaries, taxes, and maintenance, they end up with a net profit of $50,000.
An employee receives a monthly gross salary of $5,000, but after taxes, contributions, and deductions, their net pay is $3,500.
A seller on an online marketplace sells an item for $50, but after deducting fees, shipping costs, and other expenses, they receive a net amount of $40.
Legal Terms Similar to Net
- Gross - Refers to the total amount before any deductions or expenses have been made.
- Net income - The amount of income left over after all expenses have been deducted.
- Net worth - The total value of an individual's assets minus their liabilities.