Which of the following equations correctly describes how to calculate net income?a.net income = (cost of goods sold) - (net sales) - (operating expenses)b.net income = (operating expenses) - (cost of goods sold) - (net sales)c.net income = (operating expenses) + (cost of goods sold) - (net sales)d.net income = (net sales) - (cost of goods sold) - (operating expenses)
Net income is calculated by subtracting expenses from net sales. First subtract cost of goods sold from net sales, then subtract operating expenses: net income = net sales − cost of goods sold − operating expenses. This matches choice D.
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