How can net income be correctly calculated?

Net income is calculated as revenues minus expenses, which reflects the profitability of a business over a specific period. This measure is fundamental to understanding a company's financial performance, as it indicates how much money is left after all costs associated with generating revenue have been deducted.

Revenues encompass all income earned from sales or services, while expenses include all costs incurred in the operation of the business, such as cost of goods sold, administrative expenses, and other operational costs. By subtracting total expenses from total revenues, you arrive at the net income figure, which provides a clear picture of whether a company is operating at a profit or a loss.

In comparing this to the other options, while assets and liabilities represent a company's financial position at a point in time, they do not measure profitability directly. The calculation involving total debits and credits pertains to double-entry bookkeeping, focusing on balance rather than income. Similarly, gross profit minus operating expenses is a step in the process of calculating net income, but it is not the complete or direct calculation. Thus, the most straightforward and accurate method for arriving at net income is indeed through the revenue and expense relationship.