"Bottom line" redirects here. For other uses see Bottom line (disambiguation). It has been suggested that this article or section be merged with profit (accounting). (Discuss) Proposed since May 2009. Accountancy Key concepts Accountant  Accounting period  Bookkeeping  Cash and accrual basis  Cash flow management  Chart of accounts  Constant Purchasing Power Accounting  Cost of goods sold  Credit terms  Debits and credits  Double-entry system  Fair value accounting  FIFO & LIFO  GAAP / IFRS  General ledger  Historical cost  Matching principle  Revenue recognition  Trial balance Fields of accounting Cost  Financial  Forensic  Fund  Management  Mergers and Acquisitions  Tax Financial statements Statement of Financial Position  Statement of cash flows  Statement of changes in equity  Statement of comprehensive income  Notes  MD&A  XBRL Auditing Auditor's report  Financial audit  GAAS / ISA  Internal audit  SarbanesOxley Act Accounting qualifications CA  CPA  CCA  CGA  CMA This box: view talk

Net income is the residual income of a firm after adding total revenue and gains and subtracting all expenses and losses for the reporting period. Net income can be distributed among holders of common stock as a dividend or held by the firm as an addition to retained earnings. As profit and earnings are used synonymously for income (also depending on UK and US usage) net earnings and net profit are commonly found as synonyms for net income. Often the term income is substituted for net income yet this is not preferred due to the possible ambiguity. Net income is informally called the bottom line because it is typically found on the last line of a company's income statement (a related term is top line meaning revenue which forms the first line of the account statement).

The items deducted will typically include tax expense financing expense (interest expense) and minority interest. Likewise preferred stock dividends will be subtracted too though they are not an expense. For a merchandising company subtracted costs may be the cost of goods sold sales discounts and sales returns and allowances. For a product company advertising manufacturing and design and development costs are included. An equation for net income Net sales revenue Cost of goods sold Gross profit SG&A expenses (combined costs of operating the company) EBITDA Depreciation & amortization EBIT Interest expense (cost of borrowing money) EBT Tax expense Net income (EAT) See also Dividend Economic value added Gross income Income statement Liquidating dividend Net income per employee Operating income Operating Income Before Depreciation and Amortization Opportunity cost Profit (accounting) This accountancy-related article is a stub. You can help Wikipedia by expanding it.v d e