A Corporation Started Operations on January 1; the Reporting Period

question 63

Essay

A corporation started operations on January 1; the reporting period ends December 31. At the end of the year, the company's records reflected the following amounts after all adjusting entries: Sales revenue, $700,000; Cost of goods sold, $400,000; Expenses (total), $200,000; Accrued wages payable, $5,000; Accounts payable, $10,000 and Accounts receivable, $25,000.
(a) Net income, accrual basis, was $____________________.
(b) Net cash inflow from operating activities was $____________.

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Definitions:

Gross Method

An accounting practice where purchases are recorded at their full invoice amount without deducting any cash discounts.

General Journal Entries

The recordings of financial transactions in the general journal, including both the debit and credit sides of each transaction.

Gross Margin Ratio

Gross margin ratio is a financial metric that measures a company's gross profit relative to its sales revenue, indicating the efficiency of production and pricing strategies.

Relative Liquidity

A measure of the ease with which an asset can be converted into cash without affecting its market price, compared to other assets.