Part 1During the year, FastClean Corporation has $ 310,000$310,000 in revenues, $ 145,000$145,000 in expenses, and $ 11,000$11,000 in dividend declarations and payments. Net income for the year was Part 1
A. $ 310,000$310,000. B. $ 165,000$165,000. C. $ 156,000$156,000. D. $ 176,000$176,000.

Question

Part 1During the​ year, FastClean Corporation has $ 310,000$310,000 in​ revenues, $ 145,000$145,000 in​ expenses, and $ 11,000$11,000 in dividend declarations and payments. Net income for the year was Part 1
A. $ 310,000$310,000. B. $ 165,000$165,000. C. $ 156,000$156,000. D. $ 176,000$176,000.

BlackTom AI · Accepted Answer

Net income is calculated as revenues minus expenses; dividends are distributions of earnings and do not affect net income.

Relevant concepts:
- Revenues: inflows from operations (here $310,000).
- Expenses: costs incurred to earn revenues (here $145,000).
- Net income = Revenues − Expenses.
- Dividends: distributions of retained earnings to owners; they reduce retained earnings (equity) but are not an expense and therefore do not reduce net income.

Step-by-step calculation:
1. Start with revenues: $310,000.
2. Subtract expenses: $310,000 − $145,000.
3. Compute the difference: 310,000 − 145,000 = 165,000.
4. Dividends of $11,000 are distributions and do not enter the net income calculation, so net income remains $165,000.

Why the correct answer is correct:
- Applying the net income formula (revenues − expenses) yields $165,000. Because dividends are not an expense, they are excluded from the net income computation; they only affect retained earnings on the balance sheet after net income is determined.

Why the other options are incorrect:
- A. $310,000: This would ignore expenses entirely (revenues only), which is incorrect because expenses must be subtracted to find net income.
- C. $156,000: This number does not match any correct subtraction. If someone mistakenly subtracted dividends as an expense, the result would be 310,000 − 145,000 − 11,000 = $154,000, not $156,000. Thus $156,000 is incorrect.
- D. $176,000: This is higher than the correct net income and would imply adding something to revenues or subtracting a smaller expense; it does not follow from the given figures.

Conclusion: Net income = $310,000 − $145,000 = $165,000, so the correct answer is B. $165,000.

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