Mofro's Computer Repair Shop started the year with total assets of $300,000 and total liabilities of $200,000. During the year, the business recorded $500,000 in computer repair revenues, $300,000 in expenses, and Mofro paid dividends of $50,000. The net income reported by Mofro's Computer Repair Shop for the year was
A) $100,000.
B) $150,000.
C) $200,000.
D) $250,000.

Question

Quizplus · Accepted Answer

Net income is calculated as total revenues minus total expenses. In this case, the total revenues were $500,000 and the total expenses were $300,000, so the net income is $200,000. Dividends paid do not affect the calculation of net income. So the net income reported by Mofro's Computer Repair Shop for the year was $200,000.

Mofro's Computer Repair Shop Started the Year with Total Assets