Final Answer:
The net income for this scenario is $8,200. Thus the option 1 is correct.
Step-by-step explanation:
To determine the net income or net loss, subtract the total expenses from the total revenues. The formula for calculating net income is:
Net Income = Total Revenues - Total Expenses
Given:
Total Revenues = $25,700
Total Expenses = $17,500
Substituting the values into the formula:
Net Income = $25,700 - $17,500
Net Income = $8,200
Therefore, the net income for this scenario is $8,200. This means that after accounting for all expenses, the business has a positive net income of $8,200.
Explanation (180-250 words):
In accounting, determining the net income involves subtracting the total expenses from the total revenues. The formula for net income is straightforward: Net Income = Total Revenues - Total Expenses. In this case, given that the total revenues amount to $25,700 and the total expenses sum up to $17,500, the calculation is as follows: Net Income = $25,700 - $17,500, resulting in a net income of $8,200.
Net income represents the profitability of a business or entity after deducting all expenses from its revenues. A positive net income, as seen in this case, indicates that the business has generated more revenues than the total expenses incurred during the specified period. This outcome signifies a healthy financial position, as the business has surplus earnings after covering all costs, which can be reinvested, distributed to shareholders, or utilized for further growth strategies.
Understanding net income is crucial for evaluating a company's financial health. It serves as a key metric for investors, stakeholders, and management to assess the efficiency of operations and profitability. In this scenario, a net income of $8,200 implies that the company has managed its expenses well and generated a profit, contributing positively to its overall financial performance.
Thus the option 1 is correct.