Rushmore Company provided services for $45,000 cash during Year 1. Rushmore incu

Question

Rushmore Company provided services for $45,000 cash during Year 1. Rushmore incurred $36,000 expenses on account during Year 1, and by the end of the year, $9,000 of that amount had been paid with cash. Assuming that these are the only accounting events that affected Rushmore during Year 1 Multiple Choice The amount of net cash flow from operating activities shown on the statement of cash flows is $ The amount of net loss shown on the income statement is $9,000. The amount of net income shown on the income statement is $9,000 The amount of net income shown on the income statement is $27000

Explanation / Answer

The amount of net income shown on the income stateent is $9,000

Under accrual basis of accounting, expenses are matched with the related revenues and/or are reported when the expense occurs, not when the cash is paid, so cash payment of 9,000 is not considered for computation of income/loss

Income from services 45000 Expenses incurred 36000 Net income 9000

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