Net income is defined as

Net income is defined as

• A. the total revenue
• B. the difference between total revenue and total expenses when total expenses are greater
• C. the total expenses
• D. the difference between total revenue and total expenses when total revenue is greater

Answer: (D)

Net income is the amount a business earns after subtracting its expenses from its revenues. In other words, it’s the positive difference when total revenue exceeds total expenses, calculated as total revenue minus total expenses. If expenses were higher than revenue, you’d have a net loss instead. The other choices don’t capture this idea: simply revenue ignores costs, expenses alone don’t reflect profitability, and the difference when expenses exceed revenue describes a net loss, not net income.

Net income is the amount a business earns after subtracting its expenses from its revenues. In other words, it’s the positive difference when total revenue exceeds total expenses, calculated as total revenue minus total expenses. If expenses were higher than revenue, you’d have a net loss instead. The other choices don’t capture this idea: simply revenue ignores costs, expenses alone don’t reflect profitability, and the difference when expenses exceed revenue describes a net loss, not net income.