Final answer:
Revenues, Wages Expense, and Net Income are all part of the Income Statement, which details a company's financial performance, including profits and losses over a specific time. It shows revenues and subtracts expenses to calculate Net Income. The Balance Sheet and Statement of Owner's Equity serve different purposes in financial reporting.
Step-by-step explanation:
Revenues, Wages Expense, and Net Income are all components of the Income Statement. This financial statement provides detailed information on a company's financial performance over a specific period of time, typically a fiscal quarter or year. Revenues represent the total income received from the sale of goods or services before any expenses are deducted. The Wages Expense is a line item that reflects the total amount of money spent on labor. Net Income, also known as net profit, represents the final amount of income that a company retains after all expenses have been subtracted from its revenues. To calculate it, you subtract all costs, including Wages Expense and other operating expenses, from the Revenues. Conversely, a Balance Sheet shows a company's financial position at a specific point in time, including its assets, liabilities, and shareholder equity. The Statement of Owner's Equity, on the other hand, shows changes in the owner's equity over a period of time.
As an example of how these come into play, consider a firm's accounting profit, which is equal to its total revenues minus explicit costs. If a firm had sales revenue of $1 million last year and spent $600,000 on labor (Wages Expense), $150,000 on capital, and $200,000 on materials, its accounting profit would be:
Total Revenues ($1,000,000) - (Wages Expense $600,000 + Capital $150,000 + Materials $200,000)= Net Income $50,000
This is a simple illustration of how the Income Statement is used to determine a company's profitability within a specific period, contributing to financial analysis and business decision-making.