Net income
Net income is equal to the
income that a firm has after subtracting costs and
expenses from the total
revenue. Expenses will typically include
tax expense. For a
merchandising company, subtracted costs may be the cost of goods sold, sales discounts, and sales returns and allowances. For a product company
advertising,
manufacturing, and design and development costs are included.
Net income is sometimes called the
bottom line because it is typically found on the last line of a company's
income statement.
An equation for net income in merchandising:
Net income or Net loss = Revenue - Cost of goods sold - Sales discounts - Sales returns and allowances - Expenses = Profit
Another term that is closely related to this is top line. As the Total Revenue forms the first line of the account statement, it is often called top line.
