 Hello, in this lecture we will define net pay according to fundamental accounting principles while the 22nd edition the definition of net pay is gross pay less all deductions also called take home pay. When we're thinking about net pay we're thinking about the paycheck that an employee will receive and we're thinking about the net pay net of those deductions those deductions including withholding. Let's take a look at an example. If we had total wages or gross pay of 1200 we would then be removing some things as the employer some things that are going to be required to be removed by government including tax withholdings some things that might be benefits to the employees such as retirement plan contributions or health care. So we might have Medicare or we would almost definitely have Medicare that would have to be withheld part of our payroll taxes from the employee wages we would have