What does 'net income' refer to in accounting?

Net income in accounting refers to the amount remaining after all expenses, including taxes, have been deducted from total revenues. This figure is critical as it represents the actual profit earned by the company during a specific period, providing insight into the company’s profitability and financial health. It is calculated by subtracting all costs, expenses, and taxes from total revenues. Understanding net income helps stakeholders assess the company’s performance and make informed decisions regarding investments, operations, and other financial strategies. This context places net income as a key indicator of financial success, distinguishing it from simply total revenue, gross profit, or operating expenses, which do not account for all financial commitments and the actual profit retained by the business.