A Company Started Business on January 1, 2006

question 51

Multiple Choice

A company started business on January 1, 2006. At the end of 2006, the accounting records provided the following unadjusted and pre-tax amounts: Sales revenue (cash) , $186,000; cost of goods sold, $100,000; expenses (cash) , $40,000; accrued wages, $6,000; accrued rent revenue, $2,000; and a 40 percent average income tax rate. What was the net income on accrual basis?

• A) $22,800
• B) $25,200
• C) $27,600
• D) $30,000

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Definitions:

Immigration Compliance

The adherence to laws and regulations governing the entry, residence, and work status of non-nationals in a country.

Federal Law

The body of law created by the federal government of a country, encompassing statutes, regulations, and case law.

Medical Insurance Protection

Coverage offered by insurance policies to help cover the cost of medical and surgical expenses of the insured individual.

Administrative Fee

A charge associated with the management or processing of a service, often added to the cost of transactions or services.