Accounting Fundamentals Certification (AFC) 2025 – 400 Free Practice Questions to Pass the Exam

When the Income Statement Credit column total is greater than the Income Statement Debit column total, it indicates that the revenues generated by the business exceed its expenses for the given period. This situation reflects a net income, meaning the business was profitable over that timeframe.

The income statement is designed to summarize revenues and expenses, with credits typically representing income or increases in equity and debits representing expenses or losses. Therefore, a higher total in the credit column suggests that the income earned is greater than the costs incurred. This positive difference is essential for stakeholders analyzing the company's financial performance, as it signifies successful operations and the ability to generate profits.

In contrast, a net loss would occur if expenses exceeded revenues, resulting in a higher total in the debit column. Zero net income would imply that the income and expenses are equivalent, leading to an equal total in both columns. Errors in entries may also affect these totals, but the question specifically addresses the situation where credits exceed debits, directly inferring net income.