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Definition and Examples of

Net Income

Expanded Explanation: Net income is the final line on the income statement, showing what the business has earned after all expenses have been subtracted from revenues. It reflects the company’s profitability and is a key indicator of its financial health.

Potential Issues: Overstating net income can lead to unrealistic stakeholder expectations and poor strategic decisions, while understating can hide potential areas for growth and performance improvement.

Example: If your online tutoring service earns $30,000 in a year and incurs $20,000 in expenses, the net income is $10,000.

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