Which of the statements below indicates that a company earned a net income for the period?
A) The sum of the credits exceeds the sum of the debits in the Balance Sheet columns on the end-of-period spreadsheet.
B) The sum of the credits exceeds the sum of the debits in the Income Statement columns on the end-of-period spreadsheet.
C) The sum of the debits exceeds the sum of the credits in the Income Statement columns on the end-of-period spreadsheet.
D) Cash inflows exceed cash outflows.

Question

Quizplus · Accepted Answer

The Income Statement summarizes a company's revenues, expenses, and net income for a specific period. If the sum of the credits (revenues) exceeds the sum of the debits (expenses) in the Income Statement columns on the end-of-period spreadsheet, it indicates that the company earned a net income for the period. Option A refers to the Balance Sheet, not the Income Statement, and does not provide information about net income. Option C indicates that the company incurred a net loss because the total expenses were higher than the revenues. Option D refers to cash flows, which may not necessarily reflect net income due to non-cash transactions.

Which of the Statements Below Indicates That a Company Earned