How is 'net income' defined in accounting?

Net income is defined as total revenue minus total expenses. This figure represents the profit that a company has earned over a specific period after accounting for all costs incurred in generating revenue, including operating expenses, interest, taxes, and other expenses.

This definition is fundamental to understanding a company's profitability and financial performance. When a business calculates its net income, it assesses how efficiently it has operated; a positive net income indicates that the company has generated more revenue than it has spent, while a negative net income signals a loss.

The other choices do not accurately reflect the concept of net income. Gross revenue before deductions does not take into account expenses, making it an incomplete picture of a company's profitability. Saying net income is the same as gross profit is misleading, as gross profit does not include all operational expenses, nor taxes, which are necessary to calculate net income. Lastly, the total of all assets pertains to the balance sheet and does not relate to income or profits at all, making it unrelated to the definition of net income.