After all of the account balances have been extended to the Balance Sheet columns of the work sheet, the totals of the Debit and Credit columns are $36,755 and $32,735, respectively. What is the amount of net income or net loss for the period?
A) $4,020 of net income
B) $36,755 of net loss
C) $4,020 of net loss
D) $32,735 of net income

Question

Quizplus · Accepted Answer

The formula for calculating net income is Revenue - Expenses = Net Income. However, the information given in the question only provides us with the totals of the Debit and Credit columns on the work sheet.

To calculate net income, we need to figure out the difference between the total revenues and the total expenses. Revenues are typically represented as credits, and expenses are represented as debits.

Given that the total credit column is $32,735 and the total debit column is $36,755, we know that there are more debits than credits. This indicates that there are more expenses than revenues, resulting in a net loss.

To calculate the net loss, we need to subtract the total expenses from the total revenues. 
$36,755 (total debit column) - $32,735 (total credit column) = $4,020 (net loss)

However, the question asks for the net income or net loss, which means that we need to reverse the sign of the result to arrive at the final answer. 
Final Answer: A) $4,020 of net income

After All of the Account Balances Have Been Extended to the Balance