BACHELOR OF BUSINESS ADMINISTRATION

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BUSINESS ADMINISTRATION

FINANCIAL ACCOUNTING

Question [CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
During 2019, CliffCo Inc. incurred operating expenses of $250, 000, of which $150, 000 was paid in cash; the balance will be paid in January 2020. transaction analysis of operating expenses for 2019 should reflect only the following:
A
Decrease stockholders’ equity, $150, 000; decreases assets, $150, 000
B
Decrease assets, $250, 000; decrease stockholders’ equity $250, 000
C
decrease stockholders’ equity, $250, 000; decrease assets, $150, 000; increase liabilities, $100, 000
D
decrease assets, $250, 000; increase liabilities, $100, 000; decrease stockholders’ equity, $150, 000
E
none of the above is correct
Explanation: 

Detailed explanation-1: -An income statement is one of the three major financial statements, along with the balance sheet and the cash flow statement, that report a company’s financial performance over a specific accounting period. The income statement focuses on the revenue, expenses, gains, and losses of a company during a particular period.

Detailed explanation-2: -A net loss is when total expenses (including taxes, fees, interest, and depreciation) exceed the income or revenue produced for a given period of time.

Detailed explanation-3: -The Income Statement (referred to in India as the profit and loss statement) reflects the performance of the firm over a period of time. “Income statement is a summary of a firm’s business revenues and expenses over a specified period, ending with net income or loss for the period.”

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