Question

If revenue is $7,000 and operating expenses are $6,000, cash flow equals _______.

Options:
Option 1: $1,000
Option 2: $13,000
Option 3: -$1,000
Option 4: -$13,000

Answer 1

Cash flow is calculated by subtracting operating expenses from revenues. For revenue of $7,000 and operating expenses of $6,000, the cash flow would be $1,000, indicating that the business has a surplus. The correct answer is Option 1: $1,000.

Step-by-step explanation:

If revenue is $7,000 and operating expenses are $6,000, the calculation for cash flow can be determined by subtracting the operating expenses from the revenues. Cash flow is a financial metric that shows how much money is entering and leaving a company during a particular period. To find the cash flow, we use the formula:

Cash Flow = Revenue - Operating Expenses

In this case, it would be:

Cash Flow = $7,000 - $6,000 = $1,000

The correct answer is Option 1: $1,000. This positive amount indicates that the company has a surplus after accounting for its operating expenses, which is generally a favorable position for any business.