The net income or net loss is calculated on the __________.
balance sheet
statement of owner's equity
income statement
None of the above answers are correct.
Answer- Income statement
To determine whether a company has a net income or net loss, you need to refer to the income statement. The income statement is one of the financial statements that companies prepare to summarize their revenues, expenses, and profits or losses over a specific period of time, typically a month, quarter, or year.
To find the net income or net loss on an income statement, you can follow these steps:
1. Identify the revenues or sales: Scan through the income statement to locate the section that lists the company's revenues or sales. This section usually includes items such as sales of products or services.
2. Identify the expenses: Look for the portion of the income statement that lists the company's expenses. This section typically includes costs like salaries, rent, utilities, advertising, and other expenses related to running the business.
3. Calculate the total revenue: Add up all the revenues or sales listed on the income statement.
4. Calculate the total expenses: Add up all the expenses listed on the income statement.
5. Calculate the net income or net loss: Subtract the total expenses from the total revenue. If the result is a positive number, it represents net income. If it is a negative number, it represents a net loss.
By following these steps and analyzing the income statement, you can determine whether a company has a net income or net loss.