The equation best describing the income statement is:
A)Revenues - Expenses = Net Income.
B)Assets = Revenues - Expenses.
C)Assets = Liabilities + Stockholders' Equity.

Question

Quizplus · Accepted Answer

The equation Revenues - Expenses = Net Income best describes the income statement, as it shows how much profit or loss a company has generated during a given period. This equation subtracts all expenses (costs of goods sold, operating expenses, etc.) from all revenues (sales, interest income, etc.) to arrive at the net income (profit) or net loss (if expenses exceed revenues).

The Equation Best Describing the Income Statement Is