Gross Operating Surplus (GOS) is the profit of enterprises on the goods and services they produce after they have paid their workers. It is their income from production (Output) less the cost of raw materials, services and overheads (Intermediate Consumption) and less labour costs (Compensation of Employees).
For example, a brewer will buy barley, hops, and yeast and turn it into beer which they will sell for more than they paid for the ingredients. This sale income is their Output. They will also have overheads for their brewery like heat, light, and insurance. The cost of raw materials and other overheads is called Intermediate Consumption. They then pay employees, and what remains is their Gross Operating Surplus.
Gross Operating Surplus is not all profit for the producer to spend as they like. It does not take account of the wear and tear on the buildings and machinery used in production (see Consumption of Fixed Capital). When we have deducted Consumption of Fixed Capital we have Net Operating Surplus.
Gross Operating Surplus is also before the producer has paid any corporation Taxes, interest on loans or dividends to shareholders (Investment Income): these have to be paid out of GOS. On the other hand, if the enterprise has subsidiaries or interest income from loans it has given out, the Gross Operating Surplus does not include the dividends and interest received.
So Gross Operating Surplus can be calculated by subtraction like this:
Gross Operating Surplus can also be calculated by adjusting taxable or accounting profit. For a Non-Financial Corporation the following adjustments might be necessary to taxable profit:
Gross Operating Surplus, along with Gross Mixed Income, Compensation of Employees, Taxes and Subsidies, is included when calculating Gross Domestic Product by the Income Method.