Question

Which of the following equations correctly describes how to calculate net income?
a.
net income = (cost of goods sold) - (net sales) - (operating expenses)
b.
net income = (operating expenses) - (cost of goods sold) - (net sales)
c.
net income = (operating expenses) + (cost of goods sold) - (net sales)
d.
net income = (net sales) - (cost of goods sold) - (operating expenses)


Please select the best answer from the choices provided

A
B
C
D

Answer 1

D

Net income = Net sales − Cost of goods sold − Operating expenses (Net sales → Gross profit after COGS → subtract operating expenses = Net income).