Winter Company Earned Revenues of $170,000 in Cash and $230,000

question 128

Multiple Choice

Winter Company earned revenues of $170,000 in cash and $230,000 on account during 2016. Of the $230,000 on account, $66,000 was collected in cash in 2016 and the rest in 2017. The company incurred expenses of $105,000 in 2016 and made payments of $80,000 towards the expenses in 2016. What is net income in 2016 under accrual accounting?

• A)$125,000
• B)$295,000
• C)$320,000
• D)$400,000

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Definitions:

Group Formation

The process of creating a collective of companies under a parent company for operational, tax, or strategic purposes.

Reporting Entity Concept

An accounting principle that states only entities that impact the economic decisions of users by providing relevant and reliable financial information should prepare and present financial statements.