S&C Corp had closing entries which included debits to revenues for a total of $4,500, credits to expenses for a total of $2,000, and credits to dividends for $500. S&C's net income was $2,000.

Question

Quizplus · Accepted Answer

The net income is calculated by subtracting total expenses from total revenues. In this case, if revenues were $4,500 and expenses were $2,000, the net income would be $2,500 ($4,500 - $2,000), not $2,000. The dividends do not affect the calculation of net income.

S&C Corp Had Closing Entries Which Included Debits to Revenues