Table 1-3
Ace Builders had the following transactions in June: earned $4,000 "on account" that will be collected in cash next month; collected $3,000 from a customer that was owed from a previous month; incurred $500 of repair expense and paid cash to the repairman; paid $1,200 cash to a supplier that it owed from the previous month; paid out $800 in cash withdrawals to the owner.
-For Ace Builders, how much was the net income or net loss in June?
A)$6,500 net income
B)$3,500 net income
C)$5,300 net income
D)$2,500 net loss

Question

Quizplus · Accepted Answer

Net income is calculated by subtracting expenses from revenues. In June, Ace Builders earned $4,000 (revenue). They incurred $500 in repair expenses. The collections and payments related to previous months' transactions do not affect this month's net income. Therefore, net income = $4,000 (revenue) - $500 (expenses) = $3,500.

Table 1-3 Ace Builders Had the Following Transactions in June: Earned $4,000