Question

Rushmore Company provided services for $25,500 cash during the 2016 accounting period. Rushmore incurred $19,000 expenses on account during 2016, and by the end of the year, $6,500 of that amount had been paid with cash. Assuming that these are the only accounting events that affected Rushmore during 2016,

-The amount of net income shown on the income statement is $12,500.
-The amount of net cash flow from operating activities shown on the statement of cash flows is $13,000.
-The amount of net income shown on the income statement is $6,500.
-The amount of net loss shown on the income statement is $6,500.

Answer 1

The net income and net cash flow from operating activities cannot be determined based on the information provided.

Step-by-step explanation:

The net income shown on the income statement cannot be determined solely based on the information provided. Net income is calculated by subtracting total expenses from total revenues.

In this case, we know that Rushmore Company provided services for $25,500 in cash and incurred $19,000 in expenses on account. However, we do not have information about total revenues or any other expenses incurred by the company. Therefore, we cannot determine the amount of net income shown on the income statement.

The amount of net cash flow from operating activities shown on the statement of cash flows can also not be determined solely based on the information provided. Net cash flow from operating activities is calculated by adjusting net income for non-cash items and changes in working capital.