Question

Answer the following

-Is net income good or bad? How do you know?

-What are some of the key questions you should ask about net income?

-Why is the Income Statement most critical (why do we spend so much time evaluating net income)?

Answer 1

The net income of a company is good or bad can be found out by knowing whether it is a profit or loss. Net income generated by business operations, is the recurring net income, which means it is the income which comes by the business of the entity but not by the other things like income obtained by extraordinary activities, like government grant etc. The questions to be asked are like, from where , the source of generation. Income statement is a very important statement of a entity. It includes all the expense of the entity. Its tells the result of the entity in its business.