What is the result of total revenue minus expenses?

• A. Net Income
• B. Total Equity
• C. Net Asset Value
• D. Gross Income

Answer: (A)

The result of total revenue minus expenses is known as net income. This figure represents the profitability of a business over a specific period of time, indicating how much money remains after all operating costs, interest, taxes, and expenses have been deducted from total revenue. A positive net income means that the business is earning more than it spends, which is crucial for its sustainability and growth.

Understanding net income is essential for financial analysis, as it not only provides insight into the company’s operational efficiency but also helps in assessing performance and making informed business decisions. This figure is often used by investors and stakeholders to evaluate the overall health and profitability of a company.

In contrast, total equity refers to the ownership value in the business, net asset value pertains to the total assets minus total liabilities, and gross income typically reflects income before deducting any expenses. Each of these terms serves different purposes in financial reporting, but net income is specifically the result derived from subtracting expenses from total revenue.