How Is Net Income Calculated in an Income Statement

question 81

Multiple Choice

How is net income calculated in an income statement?

• A) Net income = Net operating income + Interest
• B) Net income = Gross profit - Retained earnings
• C) Net income = Net sales - Variable operating costs
• D) Net income = Earnings before taxes - Taxes
• E) Net income = Net cash flow + Depreciation

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Definitions:

Operating Profit

The profit earned from a firm's core business operations, excluding deductions of interest and tax.

Markdown

A reduction from the original or retail price of a product or service, often used to stimulate sales or clear inventory.

Real Estate Commission

The fee paid to a real estate agent or broker for their services, usually a percentage of the property's sale price.

Trade Discount

A reduction in the listed price of a good or service offered by a vendor to buyers in the same trade.