The items deducted will typically include tax expense, financing expense (interest expense), and minority interest. Likewise, preferred stock dividends will be subtracted too, though they are not an expense. For a merchandising company, subtracted costs may be the cost of goods sold, sales discounts, and sales returns and allowances. For a product company advertising, manufacturing, and design and development costs are included.
Net income is informally called the bottom line because it is typically found on the last line of a company's income statement. (A related term is top line, meaning revenue, which forms the first line of the account statement.)
An equation for net income in merchandising:
Net income or Net loss =
Revenue – Cost of goods sold – Sales discounts – Sales returns and allowances – Expenses – Minority interest – Preferred stock dividends