Which statement is true about net income?

Which statement is true about net income?

• A. Net income occurs when total expenses exceed total revenue
• B. Net loss occurs when total revenue exceeds total expenses
• C. Net income and net loss are the same concept
• D. Net income occurs when total revenue exceeds total expenses

Answer: (D)

Net income is the amount by which a company's revenues exceed its expenses. When revenue is higher than expenses, there is positive net income, signaling profitability. For example, if revenue is 100 and expenses are 75, net income is 25. If expenses exceed revenue, that results in a net loss, and if they are equal, net income is zero. The statement that matches this idea is that net income occurs when total revenue exceeds total expenses, making it the true description. The other statements mix up the relationship between revenue and expenses or equate net income with net loss, which isn’t correct.

Net income is the amount by which a company's revenues exceed its expenses. When revenue is higher than expenses, there is positive net income, signaling profitability. For example, if revenue is 100 and expenses are 75, net income is 25. If expenses exceed revenue, that results in a net loss, and if they are equal, net income is zero. The statement that matches this idea is that net income occurs when total revenue exceeds total expenses, making it the true description. The other statements mix up the relationship between revenue and expenses or equate net income with net loss, which isn’t correct.