How is the term 'earnings' generally defined in financial reporting?

The term 'earnings' in financial reporting is typically defined as the total revenue generated by a business minus the total expenses incurred during a specific period. This definition aligns with the profit or net income concept, which is a crucial measure of a company's financial performance.

Earnings represent the amount that remains after all costs of doing business have been deducted from revenue. This metric is fundamental for assessing profitability, indicating how effectively a company can convert sales into profits. It is also a key figure used by investors to evaluate a company's financial health and operational efficiency.

In contrast, the other options pertain to different aspects of a company’s financial statements. Total assets indicate the resources a company controls, total liabilities reflect the obligations it owes, and capital invested by the owners describes the equity stake in the business. These concepts, while important for a comprehensive understanding of a company’s financial position, do not encapsulate the definition of earnings as commonly understood in financial reporting.