During Year 3 a companys assets increase by 56000 and its li

During Year 3, a company\'s assets increase by $56,000 and its liabilities increase by $38,000. If no dividends were paid and there were no changes in the amount of common stock issued during the year, net income for Year 3 was:

$56,000.

$18,000.

$94,000.

$38,000.

Solution

Option B

As there are no changes due to dividends or further stock,

Net income = change in assets - change in liabilities

= (+56,000) - (+38,000)

=$18000