Net income is defined as the difference between total revenue and total expenses when total revenue is greater.

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Prepare for the NOCTI Financial and Investment Planning Test. Study with flashcards and multiple choice questions, each with detailed hints and explanations. Set yourself up for success!

Multiple Choice

Net income is defined as the difference between total revenue and total expenses when total revenue is greater.

Explanation:
Profitability is shown by net income, the amount left when total revenue is greater than total expenses. Net income is calculated by subtracting expenses from revenue; when revenue exceeds expenses, the difference is the profit for that period. This figure appears on the income statement and reflects how well the company converts sales into profit. Equity, stock, and investment describe ownership, ownership interests, or asset activities, not the profit amount. So the described difference corresponds to net income.

Profitability is shown by net income, the amount left when total revenue is greater than total expenses. Net income is calculated by subtracting expenses from revenue; when revenue exceeds expenses, the difference is the profit for that period. This figure appears on the income statement and reflects how well the company converts sales into profit. Equity, stock, and investment describe ownership, ownership interests, or asset activities, not the profit amount. So the described difference corresponds to net income.

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