During the month, Warwick Co. received $515,000 in cash and paid out $375,000 in cash. a. Do the data indicate that Warwick Co. had net income of $140,000

During the month, Warwick Co. received $515,000 in cash and paid out $375,000 in cash.

a.  Do the data indicate that Warwick Co. had net income of $140,000 during the month? Explain.

b. If the balance of the cash account is $200,000 at the end of the month, what was the cash balance at the beginning of the month?


Answer:
a. The increase of $140,000 ($515,000 – $375,000) in the cash account does notindicate net income of that amount. Net income is the excess of revenues over expenses and is normally not the same as the change in the cash account.

b. $60,000 ($200,000 – $140,000)