Final answer:
Net income is lower than gross income due to deductions and expenses incurred in generating revenue.
Explanation:
Net income is lower than gross income because it accounts for deductions and expenses incurred in generating revenue. Gross income represents the total revenue earned before any expenses or deductions are subtracted.
For example, if a company has gross income of [tex]$100,000 but incurs $[/tex]20,000 in expenses, the net income would be [tex]$80,000 ($[/tex]100,000 - $20,000).
This difference between gross and net income reflects the costs and deductions necessary to operate a business and generate profits.
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