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Nelson Company experienced the following transactions during 2016,its first year in operation.
1.Issued $12,000 of common stock to stockholders.
2.Provided $4,600 of services on account.
3.Paid $3,200 cash for operating expenses.
4.Collected $3,800 of cash from accounts receivable.
5.Paid a $200 cash dividend to stockholders.
-The amount of net income recognized on Nelson Company's 2016 income statement is:
A)$1,400.
B)$800.
C)$1,000.
D)$1,200.

Question

Use the following information for questions 
Nelson Company experienced the following transactions during 2016,its first year in operation.
1.Issued $12,000 of common stock to stockholders.
2.Provided $4,600 of services on account.
3.Paid $3,200 cash for operating expenses.
4.Collected $3,800 of cash from accounts receivable.
5.Paid a $200 cash dividend to stockholders.
-The amount of net income recognized on Nelson Company's 2016 income statement is:
A)$1,400.
B)$800.
C)$1,000.
D)$1,200.

Quizplus · Accepted Answer

Net income is calculated as total revenues minus total expenses. Nelson Company provided $4,600 of services (revenue) and paid $3,200 in operating expenses. Therefore, net income is $4,600 - $3,200 = $1,400. The dividend payment does not affect net income.

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