If Ol' Fashioned Toys' revenues are less than its expenses during the accounting period:
A)owner's withdrawals increase net income.
B)net income causes liabilities to decrease.
C)the business will incur a net loss.
D)owner's withdrawals increase owner's equity.

Question

Quizplus · Accepted Answer

If the revenues are less than expenses, then it means that the company has not generated enough revenue to cover its costs of doing business. This results in a net loss for the company. Owner's withdrawals and owner's equity are not directly affected by the company's profitability. Liabilities may decrease if the company is able to pay off some of its debts, but this would not be caused by net income.

If Ol' Fashioned Toys' Revenues Are Less Than Its Expenses