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Introduction to Calculation of Net Income

The term Net Income is a very important topic as it signifies the total profits or revenue generated by a company in a financial year. When the total expenses like operating expenses, administrative expenses, interest, cost of goods sold, taxes, depreciation, preferred stock, and dividends are subtracted from a business organizations total revenue then the remaining amount is known as the net income and it is called the bottom statement because it is calculated at bottom of the income statement.     

Net Income = Total Expenses - Total Revenues

The business organizations use the concept of net income to calculate the earnings per share and the accounting managers, analysts, financial managers, and auditors consider net income a measure to find out a company's profitability. Also, the investors will get to know whether the company is running in loss or profit and whether will they be able to pay off their dividends. You will also need to learn a few concepts related to net income like adjusted gross income, cash flow, gross income, debt to equity ratio, taxable income, assets, net investment income, liabilities, comprehensive income and many others but you don't worry because all of these will be included in our accounting assignment help service.

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