BUSINESS ADMINISTRATION
FINANCIAL ACCOUNTING
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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True
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False
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Detailed explanation-1: -If the company’s revenue is greater than its expenses, it will have a profit. On the other hand, if a company’s expenses are greater than its revenue, it’s operating at a loss.
Detailed explanation-2: -In short, stockholders’ equity always increases by the amount of net income, minus the total amount of any dividends paid.
Detailed explanation-3: -Revenues cause owner’s equity to increase. Since the normal balance for owner’s equity is a credit balance, revenues must be recorded as a credit.
Detailed explanation-4: -Net income is lower than revenue because revenue is the top line item from which expenses are deducted. However, in rare instances, net income can be higher than revenue if extraordinary, or one-time, items are included in a period.