What is the key equation to remember regarding the income statement?

Question

Liabilities = Retained earnings – Assets

Net income = Revenues – Expenses

Net Income = Assets – Liabilities

Income – Accounts payable

Answer 1

The key equation to remember regarding the income statement is:

Net income = Revenues – Expenses

This equation summarizes how net income is calculated by subtracting total expenses from total revenues, providing a clear view of a company's profitability over a specific period.