Which two broad account categories are used to determine net income? Define each category and list two examples of each type

Answer 1

Net income is determined by subtracting expenses from revenues. Revenues are defined as increases in stockholders' equity resulting from selling goods, rendering services, or performing other business activities. Examples are fees for designing a website or sales made by a hobby shop. Expenses are decreases in stockholders' equity resulting from the cost of goods and services used up in the course of earning revenues. Examples include rent expense, insurance expense, and advertising expense.