| Net Income |
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| generally accepted accounting principles | |
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Net income is equal to the Income that a firm has after subtracting costs and Expense s from the total Revenue . Net income can be distributed among holders of common stock as a Dividend . Net income is primarily an accounting term used in the US; in other countries (such as the UK ) ''' Profit ''' is the usual term. Additionally, in the US net income is often (though ambiguously) called just '''income'''. The items deducted will typically include Tax Expense , financing expense ( Interest Expense ), and Minority Interest . Likewise, preferred stock dividends will be subtracted too though they are not an 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 informally called the bottom line because it is typically found on the last line of a company's Income Statement . (A related term is Top Line , meaning Revenue , which forms the first line of the account 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 – Minority interest – Preferred stock dividends'' SEE ALSO |
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