A company started business on January 1,year 1.At the end of year 1,the financial statements showed the following amounts: Income on the accrual basis and net cash inflow from operating activities were:
A)Choice A
B)Choice B
C)Choice C
D)Choice D

Question

A company started business on January 1,year 1.At the end of year 1,the financial statements showed the following amounts:  Income on the accrual basis and net cash inflow from operating activities were: 
A)Choice A 
B)Choice B 
C)Choice C 
D)Choice D

Quizplus · Accepted Answer

Since the company started business on January 1, year 1, and the financial statements were prepared at the end of year 1, it can be assumed that the income statement and statement of cash flows were prepared for the full year.

According to the information given in the question, the income on the accrual basis was $50,000, which means that this is the revenue earned by the company during the year.

The net cash inflow from operating activities was $42,000, which means that this is the cash received from customers during the year, less the cash paid for operating expenses.

Therefore, Choice A is the best option as it reflects the revenue earned and cash received during the year.

A Company Started Business on January 1,year 1