NET INCOME

An increases in owner equity resulting from the profitable operation of the business and a decreases in owner's equity resulting from an profitable operation of the business is termed a net loss.The invest in the capital stock of a large corporation also expect the business to earn a profit which will increase the value of their investment that net income does not consist of cash or any other specific assets net income is a computation of the overall effect of many business transaction upon owner equity.The increases in owner equity resulting from profitable operation usually is accompanied by an increase in total assets though not necessarily an increase in cash an increase in owner equity is accompanied by a decrease in total liabilities.In the balance sheet the changes in owner equity resulting from profitable or UN- profitable operations are reflected in the balance of the owner's capital account.the assets of the business organization appear in the assets of the balance sheet