Question

The Whackem-Smackem Software Company sold $11 million computer games in its first year of operations. The company received payments of $7.5 million for these computer games. The company's income statement would report__________

Answer 1

The income statement would report revenue of $11 million and cash inflow of $7.5 million, but it does not specifically indicate profit or loss. Additional information is needed to determine if the company is making a profit or a loss.

Step-by-step explanation:

The Whackem-Smackem Software Company's income statement would report a revenue of $11 million from selling computer games and a cash inflow of $7.5 million from receiving payments for these games. However, the income statement does not provide information about profit or loss directly. To determine if the company is making a profit or a loss, you would need additional information such as the explicit costs (e.g., labor, capital, materials) involved in producing and selling the computer games.