Decreases equity. Represents the amount of assets owners put into a business. Equals assets minus liabilities. Is the excess of revenues over expenses. Represents owners' claims against assets.
Decreases equity. Represents the amount of assets owners put into a business. Equals assets minus liabilities. Is the excess of revenues over expenses. Represents owners' claims against assets.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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
Transcribed Image Text:### Net Income:
#### Multiple Choice
Select the correct definition of net income from the options provided below:
1. **Decreases equity.**
2. **Represents the amount of assets owners put into a business.**
3. **Equals assets minus liabilities.**
4. **Is the excess of revenues over expenses.**
5. **Represents owners' claims against assets.**
To understand the term “net income,” consider the following:
- **Net Income**: It is the measure of profitability for a company. Net income indicates the amount by which a company's revenues exceed its expenses. This figure is key to assessing a company's financial performance over a specified period.
Choose the most accurate description from the options above to solidify your understanding of net income.
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