What formula expresses the Income Statement equation?

The Income Statement equation is best expressed as Revenues minus Expenses equals Net Income. This formula is fundamental to understanding how a company's profitability is determined over a specific accounting period. By subtracting total expenses from total revenues, you arrive at net income, which represents the company's profit or loss. This metric is critical for evaluating the financial health of the business, as it shows how efficiently a company is generating profit from its revenues after accounting for all costs incurred during the period.

This approach highlights the core purpose of the Income Statement, which is to present the company's performance through its revenues and expenses during a certain time frame. The correct formula succinctly illustrates how the balance between what the company earns and what it spends ultimately leads to its financial results.