NET INCOME

What is Net Income?Net income is defined as excess of Income or Revenue of a business over all the expenditures of the business for the specified period, say an accounting year. Net Income is also termed as Net Profit or Net Earnings or bottom line profit.

Levels of Profit in P&L StatementRevenue/Sales

Gross Income/Profit

Profit/Income before Interest, Tax, Depreciation & Amortisation

(EBIDTA)Profit/Income before Tax,

Depreciation & Amortisation

Profit/ Income before Tax (PBT)

Profit/ Earning after Tax (PAT)

Net Income is important?

To know exact profitability of business To decide the pricing of products To calculate taxes to be paid To compare with peer industries To borrow funds from lenders Useful for government to frame taxation policies To attract investors to invest in business

Personal Net IncomeAggregate of income of following sources is termed as

Personal Net Income

Tax is calculated on personal Net Income which is also termed as Net Taxable Income

Income from Salary / Business & Profession

Income from other sources

Income from House Property

Income from Capital Gain

Personal Net Income

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