Which of the statements below 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 work sheet.
B) The sum of the credits exceeds the sum of the debits in the Income Statement columns on the work sheet.
C) The sum of the debits exceeds the sum of the credits in the Income Statement columns on the work sheet.
D) Cash inflows exceeded cash outflows.

Question

Quizplus · Accepted Answer

The statement "The sum of the credits exceeds the sum of the debits in the Income Statement columns on the work sheet" indicates that the company earned a net income for the period, as the income statement shows revenue (credits) minus expenses (debits), resulting in a net income or loss. Option A refers to the balance sheet, which does not directly indicate net income, while option C is the opposite of the correct statement. Option D mentions cash flow, which is not necessarily directly related to net income.

Which of the Statements Below Indicates That a Company Earned