Question

Dynamic Production Services started the year with total assets of $130,000 and total liabilities of $50,000. The company is a sole proprietorship. The revenues and the expenses for the year amounted to $100,000 and $60,000, respectively. During the year, there were no new capital contributions and the owner withdrew $45,000. Calculate Dynamicʹs net income for the year.
A) $60,000.
B) $130,000.
C) $40,000.
D) $100,000.

Answer 1

Answer:

C) $40,000.

Explanation:

As we know, the net income is a difference between the total revenues and the total expenditure incurred

Net income = Total revenues earned - Total expenditure incurred

                   = $100,000 - $60,000

                   = $40,000

By subtracting the total expenses from the total revenues we can find out the net income and the same method is applied in the above calculation