Which of the following is calculated as revenue minus expenses?

• A. Net Income
• B. Net Sales
• C. Operating Income
• D. Gross Profit

Answer: (A)

Verified step by step guidance

1. Understand the concept of Net Income: Net Income is the amount of money a company earns after subtracting all expenses, including operating expenses, taxes, and interest, from its total revenue.
2. Review the formula for Net Income: Net Income = Revenue - Expenses. This formula highlights that Net Income is derived by subtracting all expenses from the total revenue.
3. Compare Net Income with other terms: Net Sales refers to total sales minus returns, allowances, and discounts. Operating Income is calculated as gross profit minus operating expenses. Gross Profit is revenue minus the cost of goods sold (COGS). None of these terms directly represent revenue minus all expenses.
4. Identify the correct term: Based on the formula and definitions, Net Income is the term that matches the calculation of revenue minus expenses.
5. Conclude that Net Income is the correct answer to the problem, as it represents the final profit after all expenses are deducted from revenue.