Question

Revenue on account amounted to $5,000. Cash collections of accounts receivable amounted to $2,300. Expenses for the period were $2,100. Net income for the period was:_____________
A) $200.
B) $350.
C) $3,050.
D) $2,900.

Answer 1

Answer:

D) $2,900.

Explanation:

The computation of the net income is shown below:

= Revenue on account - Expenses for the period

= $5,000 - $2,100

= $2,900

To determine the net income we subtract the expenses incurred for the period from the revenues so that the accurate amount could come.

This net income would be reflected at the time of preparing the retained earning statement