What Are Gross Proceeds?

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Small-business owners know that cash flow traces the movement of money through revenue and expenditures, but once the accountant starts assigning terms such as "gross" and "net" to income, profits and expenditures, finances can become confusing. Businesses typically sell something, whether a product or service. Gross proceeds are the income resulting from other types of revenues.

What's Gross

The term “gross” refers to an amount received before any costs of production are paid. Gross proceeds include moneys realized from the sale of any assets, physical or financial; issuance of bonds to finance projects; or from a bank loan. The figure never includes debits for financing, legal fees, commissions or other costs that might diminish it. Gross proceeds also include any interest or other dividends to which the company might be legally entitled from investments.

Proceeds From Assets

Bonds and bank loans are specific concepts, but the term "assets" covers a variety of possible tranactions. The New York State Society of CPAs defines an asset as an “economic resource that is expected to be of benefit in the future.” The asset can be tangible, such as a library, or intangible, such as loans to officers. An insurance payment for fire or storm damage could also become proceeds from assets. Any item or financial instrument of value "to which the firm has legal claim” can yield gross proceeds when liquidated.