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College Accounting (Book Only): A ...

13th Edition
Scott + 1 other
ISBN: 9781337280570

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BuyFindarrow_forward

College Accounting (Book Only): A ...

13th Edition
Scott + 1 other
ISBN: 9781337280570
Textbook Problem

On an income statement, what is the difference between income from operations and net income? Which is more useful in comparing the results of operations over a number of years?

To determine

Mention the term that indicates the difference between Income from Operations and Net Income.

Explanation

Income from operations: Revenue generated mainly from business operations, before taxes, other revenues and expenses, is referred to as income from operations.

Net income: The bottom line of income statement which is the result of excess of earnings from operations (revenues) over the costs incurred for earning revenues (expenses) is referred to as net income. Net income is the positive difference between revenues and expenses. If the difference between revenues and expenses is negative, it results in net loss.

Difference between Income from Operations and Net Income:

Income

To determine

Indicate whether Income from Operations, or Net Income is more useful in comparison of results of a company for many years.

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