Net income will result when

• A. Expenses exceed revenues
• B. Revenues equal expenses
• C. Cash inflows exceed outflows
• D. Revenues exceed expenses

Answer: (D)

Net income comes from revenues minus expenses. When revenues are higher than expenses, you have a positive net income. If expenses exceed revenues, you’d have a net loss; if they’re equal, net income is zero (breakeven). The option stating that revenues exceed expenses is the one that yields positive net income because it reflects the basic calculation: more money coming in than going out. The cash-flow idea (cash inflows exceed outflows) is about actual cash movement and can differ from net income due to timing and non-cash items like depreciation, so it doesn’t determine net income by itself.