accounting quiz.docx - In its first year of operations...

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In its first year of operations, Grace Company reports the following: Earned revenues of $60,000 ($52,000 cash received from customers); Incurred expenses of $35,000 ($31,000 cash paid toward them); Prepaid $8,000 cash for costs that will not be expensed until next year. Net income under thecash basis of accounting is:A.$17,000.B.$21,000.C.$13,000.D.$25,000.E.None of the answer choices is correct.Solution:In the process of completing a work sheet, the accountant determines that the Income Statement debit column totals $83,000, while the Income Statement credit column totals $65,000. To enter net income (or net loss) for the period into the work sheet would require an entry toA.the Adjustments debit column and the Adjustments credit column.B.the Unadjusted Trial Balance debit column and the Adjustments credit column.C.it is not practical to enter Net Income (or Net Loss) on the work sheet.D.the Balance Sheet & Statement of Retained Earnings debit column and the Income Statement credit column.E.

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