Question

Totals of various columns from the worksheet are shown below. What is net income or loss?

Income Statement
Debit $6,800
Credit $9,500
Balance Sheet
Debit $7,400
Credit $4,700

Select one:
a. Net loss of $6,800.
b. Net income of $4,700.
c. Net loss of $2,700.
d. Net income of $2,700.

Answer 1

To find net income or loss, subtract the debits from the credits of the Income Statement; in this case, it results in a net income of $2,700.

Step-by-step explanation:

To determine the net income or loss, we need to look at the difference between the total credits and debits of the Income Statement. Here, the Income Statement shows Debit of $6,800 and Credit of $9,500. To calculate the net outcome, we subtract the Debits from the Credits:

$9,500 (Credit) - $6,800 (Debit) = $2,700

Since the credits are higher than the debits, this results in a net income, not a loss. Therefore, the correct answer is:

d. Net income of $2,700.