The amount of cash received from customers
Net income = sales - expenses
sales =6,95000
expenses (cost) = 43,500
net income = $695000- $43,500 =$6,51,500.
The revenues and expenses should be recognized during the period they occur. In this case, the sales are for 115,000 regardless of the amount collected during the period or subsequent periods.The expenses for the period are 71,500 Even if a portion remains unpaid at the end of the year, all the expenses for the year should be included in the calculation.Use of net cash of $135,000Why: Cashflow from Investment Activities Section acquisition of equipment (146,000) 127,000 dollars were made when equipment was sold.acquisition of land (16,000).Investing activity's net cash (135,000).Consequently, for the year, net cash flows from investing operations were ($135,000).
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