Question

During 2018, Chung Corporation earned $8,000 of cash revenue and accrued $5,000 of salaries expenses.

(a) Determine the amount of net income that Chung would report on the 2018 income statement.
(b) Determine the amount of net cash flow from operating activities that Chung would report on the 2018 statement of cash flows.

Answer 1

Answer:

a. The amount of net income that Chung would report on the 2018 income statement was $3,000

b. The amount of net cash flow from operating activities that Chung would report on the 2018 statement of cash flows was $8,000

Explanation:

a. The amount of net income that Chung would report on the 2018 income statement = Cash revenue - accrued salaries expenses = $8,000 - $5,000 = $3,000

b. Chung Corporation accrued $5,000 of salaries expense and the expenses were not paid in 2018.

The amount of net cash flow from operating activities that Chung would report on the 2018 statement of cash flows = Cash revenue = $8,000