Question

Income statement accounts to find out--------------

a. Net income (loss) are service revenue - salary expense,
b. rent expense - rent
c. expense - utilities
d. expense = net income (loss)

Answer 1

The net income (loss) on an income statement is calculated by subtracting total expenses from total revenues. To determine net income or loss for an insurance company, consider premiums and investments income, and subtract the payment of claims and operating expenses. The calculation formula is Net Income (Loss) = Total Revenues - Total Expenses.

Step-by-step explanation:

Understanding Net Income (Loss) on Income Statements

The student's question relates to finding the net income (loss) in an income statement for a business. The net income is calculated by subtracting all expenses from the total revenue. In the context of an insurance company, money comes in through premiums and investments, while money goes out due to the payment of claims and operating expenses. An income statement typically lists various types of revenue and expenses, including service revenue, salary expense, rent expense, and utilities expense, among others. To calculate net income or loss, we follow this formula:

Net Income (Loss) = Total Revenues − Total Expenses

Where:

• Total Revenues include all the income generated from services, products, or other sources.
• Total Expenses encompass all costs incurred, such as salaries, rent, utilities, and other operating expenses.