Describe the difference between gross and net operating income.

The correct answer highlights that gross operating income represents the total revenue generated by a property before any expenses are deducted. This includes all potential income from rentals, fees, and any additional income sources associated with the property. On the other hand, net operating income considers the actual profitability of the property by subtracting operating expenses such as maintenance, management fees, property taxes, and utilities from the gross operating income.

This distinction is crucial in the field of real estate appraisal and investment analysis because net operating income provides a clearer picture of a property's financial health and is often used to evaluate the property's performance and value.

The other options do not accurately convey this difference; for instance, one suggests that gross income includes expenses when it actually does not, while another states that net operating income is always larger than gross income, which contradicts the very definitions of these terms. The idea that both terms refer to the same concept is incorrect, as they represent distinct calculations that serve different purposes in assessing a property's financial viability.