Net Income is defined as excess of Income or Revenue of a business over all the expenditures of the business for the specified period, say an accounting year. Net Income is also termed as Net Profit or Net Earnings or bottom line profit. Copy the link given below and paste it in new browser window to get more information on Net Income:- www.transtutors.com/homework-help/accounting/net-income.aspx

1. NET INCOME

2. What is Net Income?
Net income is defined as excess of Income or
Revenue of a business over all the expenditures of
the business for the specified period, say an
accounting year.
Net Income is also termed as Net Profit or Net
Earnings or bottom line profit.

3. Levels of Profit in P&L Statement
Revenue/Sales
Gross Income/Profit
Profit/Income before Interest, Tax,
Depreciation & Amortisation (EBIDTA)
Profit/Income before Tax,
Depreciation & Amortisation
Profit/ Income before Tax (PBT)
Profit/ Earning after Tax (PAT)

4. Net Income is important?
 To know exact profitability of business
 To decide the pricing of products
 To calculate taxes to be paid
 To compare with peer industries
 To borrow funds from lenders
 Useful for government to frame taxation policies
 To attract investors to invest in business

5. Aggregate of income of following sources is termed as Personal
Net Income
Tax is calculated on personal Net Income which is also termed as Net
Taxable Income
Income from Salary
/ Business &
Profession
Income from other
sources
Income from House
Property
Income from Capital
Gain
Personal
Net Income

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