A Company Reported Net Income of $150,000 for the Current

question 41

Multiple Choice

A company reported net income of $150,000 for the current year, but its cash balance decreased by $40,000. Which financial statement should management refer to for an explanation of this situation?

• A)Balance Sheet
• B)Income Statement
• C)Statement of retained Earnings
• D)Statement of Cash Flows

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Definitions:

Gross Pay

The total amount of money an employee earns before any deductions are taken out such as taxes or retirement contributions.

FICA-Medicare

A federal tax in the United States deducted from workers' paychecks to fund the Medicare program, which provides health insurance to individuals who are 65 years of age or older or who meet other specific criteria.

State Unemployment Funds

Reserves maintained by individual U.S. states to provide unemployment benefits to eligible laid-off workers.

Payroll Tax

Financial obligations enforced on both employers and employees, usually measured as a portion of the compensation employers provide to their personnel.