ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -What is Net Income? Net income is the amount of accounting profit a company has left over after paying off all its expenses. Net income is found by taking sales revenue and subtracting COGS, SG&A, depreciation, and amortization, interest expense, taxes and any other expenses.

Detailed explanation-2: -Net income refers to the amount an individual or business makes after deducting costs, allowances and taxes. In commerce, net income is what the business has left over after all expenses, including salary and wages, cost of goods or raw material and taxes.

Detailed explanation-3: -To calculate net income after taxes (NIAT), take gross sales revenue and subtract the cost of goods sold. Then subtract business expenses, depreciation, interest, amortization and taxes. Whatever’s left is the NIAT.

Detailed explanation-4: -Gross business income already deducts the cost of goods sold. To calculate net income, other expenses-including taxes-have to be deducted as well. Thus, the formula for calculating it is: Total revenue minus total expenses = net income. Let’s take a look at an example of a net income calculation for a business.

Detailed explanation-5: -Total Revenues – Total Expenses = Net Income Net income can be positive or negative. When your company has more revenues than expenses, you have a positive net income. If your total expenses are more than your revenues, you have a negative net income, also known as a net loss.