Accounting Fundamentals Certification (AFC) Practice Test

Question: 1 / 400

Where does the net income calculated for the income statement for a service business come from?

Only from the income statement columns

Only from the trial balance columns

From both trial balance and income statement columns of a worksheet

The net income for a service business, as calculated on the income statement, is derived from both the trial balance and the income statement columns of a worksheet. The trial balance provides the initial figures for revenues and expenses, which are crucial in determining net income. These figures are then transferred to the income statement columns to calculate the total revenues and total expenses. Subtracting total expenses from total revenues gives the net income.

This process demonstrates how the worksheet serves as a comprehensive tool that integrates various financial data sources, ensuring accuracy in the financial statements. The other options do not encompass this combination of data sources or omit critical aspects of the accounting cycle involved in determining net income.

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From the cash flow statement

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