How is "net income" defined in financial terms?

Net income is defined as the total revenues generated by a business minus the total expenses, taxes, and costs associated with operating the business. This figure represents the profit that a company has earned over a specific period after all applicable expenses have been deducted from its revenue. It serves as an essential indicator of a company's financial performance and profitability.

The definition includes not only regular operating expenses but also any additional costs such as interest and tax expenses, leading to a comprehensive view of the business's profitability. Net income is a crucial figure for evaluating a company's financial health, as it affects retained earnings and, consequently, shareholders' equity.

In contrast, the other options do not accurately capture this concept. For instance, simply adding total revenues and total expenses does not provide a meaningful assessment of income. The focus on assets and liabilities pertains to balance sheets rather than income statements, and summing total expenses plus taxes fails to account for the revenue generated. Thus, only the definition that emphasizes the subtraction of all necessary expenses and taxes from total revenues correctly identifies net income in financial terms.