Question

X Company is a service company and prepares monthly financial statements. In March, it billed customers $401,000 for services it provided; in April, it billed customers $354,000 for services it provided.

In April, the company received $282,000 from its March customers and $279,000 from its April customers.

Which of the following amounts will appear on X Company's April Income Statement and Statement of Cash Flows?

Income Statement, $561,000; Statement of Cash Flows, $755,000
both statements, $279,000
both statements, $354,000
Income Statement, $755,000; Statement of Cash Flows, $561,000
Income Statement, $354,000; Statement of Cash Flows, $561,000
Income Statement, $561,000; Statement of Cash Flows, $354,000

Answer 1

Due to recognition principal of accounting , income statement will show revenue of 354000 for the services it provided in month of April.

In cash flow statement amount of cash inflow will be the cash received in month of April and that is equal to 282000+279000=561000

So from the above statement we can conclude that option 5 is correct that is income statement 354000 and cash flow statement 561000

All other option are showing different values because they are principally incorrect .therefore the other options are not correct.