Multiple Choice
The primary goal of financial management is most associated with increasing the:
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4. Merchandising Operations
Net Sales
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Net income is shown on the work sheet as a:
A
debit in the Balance Sheet column
B
credit in the Balance Sheet column
C
debit in the Income Statement column
D
credit in the Income Statement column
Verified step by step guidance1
Understand the concept of net income: Net income is the difference between total revenues and total expenses. It represents the profit earned by a company during a specific period.
Review the structure of a worksheet: A worksheet is divided into columns for the Income Statement and Balance Sheet. The Income Statement column includes revenues and expenses, while the Balance Sheet column includes assets, liabilities, and equity.
Determine the placement of net income: Net income is calculated as revenues minus expenses. Since it is part of the Income Statement, it is recorded in the Income Statement column.
Understand the credit and debit rules: In accounting, revenues are credited, and expenses are debited. Since net income is derived from revenues exceeding expenses, it is recorded as a credit in the Income Statement column.
Verify the correct answer: Based on the rules and placement, net income is shown as a credit in the Income Statement column.
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