Acme,Inc.has been profitable since its first day of operations,until the recent economic downturn.This year,for the first time in fifty years,Acme has expenses that are greater than its revenues.This loss should be reported on Acme's income statement as ________.
A)an operating loss
B)an extraordinary loss
C)a loss from discontinued operations
D)a non-recurring loss

Question

Quizplus · Accepted Answer

The loss described in the scenario is a result of the economic downturn, which is a normal part of Acme's operations. Therefore, it is an operating loss, which should be reported on the income statement as a deduction from revenues to calculate the net income. B (extraordinary loss) and C (loss from discontinued operations) do not apply since there is no indication of anything unusual or one-time occurring in the business or any discontinued operations. D (non-recurring loss) could be a possibility, but operating loss is a more specific and appropriate term in this context.

Acme,Inchas Been Profitable Since Its First Day of Operations,until the Recent