The net income for this firm is:
1) 638,000 - 329,000 - 74,000 = 235,000
2) 235,000 - 39,000 = 196,000
3) 196,000 * .21 = 41,160
4) 196,000 - 41,160 = $154,840
Net income can either be added to retained earnings by the company or given as a dividend to ordinary stockholders.
Net earnings and net profit are frequently used as synonyms for net income because profit and earnings are used interchangeably for income.
Net income is frequently substituted with the word income, but this is not preferred owing to potential ambiguity.
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