What Is a Firm's Net Income

question 9

Multiple Choice

What is a firm's net income?

• A)the difference between the sales and other income generated by the firm,and all costs,taxes,and expenses incurred by the firm in a given period
• B)the last or "bottom" line of the income statement
• C)a measure of the firm's profitability over a given period
• D)all of the above

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Definitions:

Accrual-Based Net Income

This is the measure of profitability that includes all earned revenues and incurred expenses within a reporting period, according to the accrual basis of accounting.

Initial Value Method

The procedure of accounting for an investment at its cost at the time of purchase without subsequent adjustment for changes in market value.

Dividends

Payments made to shareholders out of a corporation's profits as a return on their investment.

Consolidated Net Income

The total profit of a parent company and its subsidiaries after taxes and interest, reflecting the group's overall financial performance.