To determine net income, you should subtract expenses from income.

• A. Subtract expenses from income
• B. Add expenses to income
• C. Multiply income by expenses
• D. Divide income by expenses

Answer: (A)

Net income shows how much money remains after paying all expenses. You determine it by subtracting the total expenses from the total income, because expenses are the costs that reduce what you keep from what you earned. For example, if income is 10,000 and expenses are 7,500, net income is 2,500. If expenses exceed income, net income becomes negative, indicating a loss. Adding expenses would increase the number and misrepresent profit, while multiplying or dividing by expenses does not reflect the actual profit or loss.