Question

Use the following appropriate amounts to calculate net income: Revenues, $12,000; Liabilities, $5,000; Expenses, $4,000; Assets, $19,000; Dividends, $4,000A. $6,000.B. $8,000.C. $4,000.D. $14,000

Answer 1

Answer: $8,000

Explanation: In simple words, net income refers to the amount of revenue left with the company after deducting for the expenses incurred to generate those revenues. It is that amount of income which the owners can use as per their own will.

Thus from the above we can conclude that the amount of net income is

$12,000 - $4,000 = $8,000