Net income is the amount left after deducting expenses from income. Which option best defines it?

• A. Income minus expenses.
• B. Expenses minus income.
• C. Assets minus liabilities.
• D. Cash inflows minus outflows.

Answer: (A)

Net income is the profit earned in a period, calculated as revenues (income) minus expenses. This is the amount left after covering costs, and it’s the profitability figure shown on the income statement. The option that matches this is income minus expenses, because it subtracts what the business spends from what it earns. Subtracting income from expenses would invert the calculation and doesn’t represent profit. Assets minus liabilities gives equity, not net income. Cash inflows minus outflows describes net cash flow, which can differ from net income due to timing and non-cash items.