? - Expenses = Net Income
Select missing term.
Select the financial statement that the equation illustrates:
A. Balance Sheet
B. Income Statement
C. Equity Statement
A Statement of income is one of the statements that are prepared in financial accounting. It is used to show the profitability of a company. It contains items such as revenue, cost of goods sold and expenses. It is used by investors to determine whether a given organization is profitable from its operations or not.
Answer and Explanation:
Answer: Option E
Expenses are usually deducted from revenue to get profit or net income. Other items like liabilities, assets and shareholder?s equity form an equation referred to as an accounting equation.
Type of statement:
Answer: Option B
The income statement is used to determine profit. It contains revenue and expenses. On the other hand, a balance sheet shows assets and liabilities.
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from Accounting 101: Financial AccountingChapter 2 / Lesson 2