Which of the following statements 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 shows whether a company has earned a net income or incurred a net loss. 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, the company has earned a net income for the period. Option A relates to the Balance Sheet, which shows the financial position of a company at a specific point in time, not whether the company has earned a net income. Option C indicates that the company has incurred a net loss. Option D refers to cash flow and does not specifically indicate whether the company has earned a net income.

Which of the Following Statements Indicates That a Company Earned