In Its First Year of Operations, Grace Company Reports the Following

question 12

Multiple Choice

In its first year of operations, Grace Company reports the following: Earned revenues of $60,000 ($52,000 cash received from customers) ; Incurred expenses of $35,000 ($31,000 cash paid toward them) ; Prepaid $8,000 cash for costs that will not be expensed until next year. Net income under the accrual basis of accounting is:

• A) $13,000.
• B) $21,000.
• C) $25,000.
• D) $17,000.
• E) None of these options are correct

---

Definitions:

Cost Of Production Report

A document that outlines the total cost and production information for a specific period within a manufacturing department.

Production Costs

Expenses incurred in the process of making or manufacturing a product.

Cost Of Production Report

A document detailing the total cost involved in manufacturing goods, including materials, labor, and overhead expenses.

Finished Goods

Finished goods are completed products ready for sale.