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 show debits of $37,686 and credits of $41,101. This indicates that
A) neither net income nor loss can be calculated because it is found on the income statement
B) the company has a net loss of $3,415 for the period
C) the company has a net income of $3,415 for the period
D) the amounts are out of balance and need to be corrected

Question

Quizplus · Accepted Answer

The difference between the total debits and total credits is a net loss of $3,415, which indicates that the company did not generate enough revenue to cover its expenses for the period. Option A is incorrect because the net income or loss cannot be determined solely from the Balance Sheet, as it is found on the Income Statement. Option C is incorrect because the net income would be positive, not negative as shown. Option D is incorrect because the discrepancy between the debit and credit totals is due to the net loss, not an error in recording.

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