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

Question

Net income = Revenues – Expenses

Liabilities = Retained earnings – Assets

Income – Accounts payable

Net Income = Assets – Liabilities

Answer 1

The key equation to remember regarding the income statement is:

Net income = Revenues – Expenses

This equation summarizes the fundamental relationship in the income statement, which shows how much profit a company generates after deducting its expenses from its revenues.