Which financial statement component increases with a positive net income?

A positive net income reflects the profitability of a business and results in an increase in equity, specifically through retained earnings. Retained earnings are part of shareholders' equity that represents the cumulative amount of net income that has been retained in the company rather than distributed as dividends. When a company earns a profit (positive net income), this profit accumulates in retained earnings, thus increasing the overall equity of the business.

Liabilities, revenue, and expenses behave differently in relation to net income. Liabilities typically decrease with a reduction in net income when a company uses profits to pay down debt, while revenue represents the income generated from sales before expenses are accounted for and doesn't automatically increase with net income. Likewise, expenses, which are costs incurred in the process of generating revenue, do not increase with positive net income; instead, they are subtracted from revenue to arrive at net income. Therefore, the correct answer stands, highlighting the direct link between positive net income and the increase in equity.