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

When a company's expenses exceed its revenues, it results in a net loss, not a net income. This impacts the financial statements by reducing the owner's equity but does not directly affect liabilities or result in an increase in net income or owner's equity through withdrawals.

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