Difference between revisions of "Net income"
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| − | '''Net income''' is equal to the [[income]] that a firm has after subtracting costs and [[expense]]s from the total [[revenue]]. Expenses will typically include [[tax]] expense. For a [[merchandising]] [[company]], subtracted costs may be the cost of goods sold, sales discounts, and sales returns and allowances. For a product company [[advertising]], [[manufacturing]], and design and development costs are included. | + | '''Net income''' is equal to the [[income]] that a firm has after subtracting costs and [[expense]]s from the total [[revenue]]. Expenses will typically include [[tax]] expense. For a [[Merchandise|merchandising]] [[company]], subtracted costs may be the cost of goods sold, sales discounts, and sales returns and allowances. For a product company [[advertising]], [[manufacturing]], and design and development costs are included. |
Net income is sometimes called the '''bottom line''' because it is typically found on the last line of a company's [[income statement]]. | Net income is sometimes called the '''bottom line''' because it is typically found on the last line of a company's [[income statement]]. | ||
Revision as of 20:58, 10 March 2007
Net income is equal to the income that a firm has after subtracting costs and expenses from the total revenue. Expenses will typically include tax expense. For a merchandising company, subtracted costs may be the cost of goods sold, sales discounts, and sales returns and allowances. For a product company advertising, manufacturing, and design and development costs are included.
Net income is sometimes called the bottom line because it is typically found on the last line of a company's income statement.
An equation for net income in merchandising:
Net income or Net loss = Revenue - Cost of goods sold - Sales discounts - Sales returns and allowances - Expenses = Profit
Another term that is closely related to this is top line. As the Total Revenue forms the first line of the account statement, it is often called top line.
ASK query by Keyword
<ask> net income </ask>
