Sparty Corporation has provided the following information for its most recent year of operation:
Posted: Sat Aug 07, 2021 6:58 am
Revenues earned were $97,000, of which $9,000 were uncollected at the end of the year.
Operating expenses incurred were $39,000, of which $7,000 were unpaid at the end of the year.
Dividends declared were $11,000, of which $3,000 were unpaid at the end of the year.
Income tax expense is $17,400.
What is the amount of net income reported on Sparty's income statement?
A) $32,900.
B) $39,300.
C) $33,600.
D) $40,600.
Answer: D
Explanation: $40,600 = Revenues earned ($97,000) minus operating expenses ($39,000) minus
income tax expense ($17,400).
Difficulty: 2 Medium
Topic: Financial statements—Income statement
Learning Objective: 01-01 Recognize the information conveyed in each of the four basic
financial statements and the way that it is used by different decision makers (investors, creditors,
and managers).
Operating expenses incurred were $39,000, of which $7,000 were unpaid at the end of the year.
Dividends declared were $11,000, of which $3,000 were unpaid at the end of the year.
Income tax expense is $17,400.
What is the amount of net income reported on Sparty's income statement?
A) $32,900.
B) $39,300.
C) $33,600.
D) $40,600.
Answer: D
Explanation: $40,600 = Revenues earned ($97,000) minus operating expenses ($39,000) minus
income tax expense ($17,400).
Difficulty: 2 Medium
Topic: Financial statements—Income statement
Learning Objective: 01-01 Recognize the information conveyed in each of the four basic
financial statements and the way that it is used by different decision makers (investors, creditors,
and managers).