The net income formula emphasized in the income statement is
A) Net operating income = gross sales - discounts
B) Net operating income = gross sales - discounts - cost of goods sold
C) Net operating income = net sales - cost of goods sold - operating expenses
D) None of the above

Question

Quizplus · Accepted Answer

Net income, often referred to as net profit or the bottom line, is calculated by subtracting all of a company's expenses, including operating expenses, cost of goods sold (COGS), and any other expenses from its total revenue. Option C accurately reflects this by stating net income is derived from net sales minus the cost of goods sold and operating expenses.

The Net Income Formula Emphasized in the Income Statement Is