During Year 1 China Enterprises experienced the following events:(1)Earned $10,000 of revenue on account(2)Incurred $9,000 of expenses on accountBased on this information, which of the following describes the combined effects of both events on the amounts of total assets, net income, and cash flows from operating activities shown on the Year 1 financial statements? $\begin{array}{l}
\text { Total Assets }&\text {Net Income}&\text { cash Flow trom operating } \
&&\text { Activities } \
\end{array}$
A. $\begin{array}{rrrr}& \$ 1,000 &&&& \$ 1,000 &&&&&& 0 \\end{array}$
B. $\begin{array}{rrrr} & \$ 10,000 &&&& \$ 1,000 &&&&&& 0 \\end{array}$
C. $\begin{array}{rrrr}& \$ 10,000 &&&& \$ 1,000 &&&&& \$ 1,000 \\end{array}$
D. $\begin{array}{rrrr}& \$ 10,000 &&&& \$ 10,000 &&&&& \$ 1,000
\end{array}$
A) Option A
B) Option B
C) Option C
D) Option D

Question

During Year 1 China Enterprises experienced the following events:(1)Earned $10,000 of revenue on account(2)Incurred $9,000 of expenses on accountBased on this information, which of the following describes the combined effects of both events on the amounts of total assets, net income, and cash flows from operating activities shown on the Year 1 financial statements? $\begin{array}{l}
\text { Total Assets }&\text {Net Income}&\text { cash Flow trom operating } \
&&\text { Activities } \
\end{array}$
A.  $\begin{array}{rrrr}& \$ 1,000 &&&& \$ 1,000 &&&&&& 0 \\end{array}$
B. $\begin{array}{rrrr} & \$ 10,000 &&&& \$ 1,000 &&&&&& 0 \\end{array}$
C. $\begin{array}{rrrr}& \$ 10,000 &&&& \$ 1,000 &&&&& \$ 1,000 \\end{array}$
D. $\begin{array}{rrrr}& \$ 10,000 &&&& \$ 10,000 &&&&& \$ 1,000
\end{array}$ 
A) Option A
B) Option B
C) Option C
D) Option D

Quizplus · Accepted Answer

The revenue earned on account increases total assets by $10,000, while expenses incurred on account do not affect cash flows. Net income is $1,000 ($10,000 revenue - $9,000 expenses), and cash flows from operating activities remain $0 as no cash transactions occurred.