The following table contains financial information for Trumpeter Inc. before closing entries:
Cash $ 12,000
Supplies 4,500
Prepaid Rent 2,000
Salaries Expense 4,500
Equipment 65,000
Service Revenue 30,000
Miscellaneous Expense 20,000
Dividends 3,000
Accounts Payable 5,000
Common Stock 68,000
Retained Earnings 8,000
What is Trumpeter's net income?
A) $3,500.
B) $2,500.
C) $5,000.
D) $5,500.
Answer: D
Which of the following best describes the information reported in the income statement?
A) The portion of profits paid in cash to stockholders.
B) The current resources available to pay current obligations.
C) The amount recognized from providing goods and services to customers compared to the cost of doing so.
D) The extent to which cash inflows exceed cash outflows.
Answer: C
Which of the following is true about an income statement?
A) It reports activity for a period of time.
B) It does not include dividends paid.
C) It reports revenues and expenses.
D) All of the other answers are true.
Answer: D
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