In a corporation, when expenses are greater than revenues in a given period and there are no other gains or losses, _________________
A)stockholders' equity will not be impacted.
B)stockholders' equity will be increased.
C)stockholders' equity will be decreased.
D)the impact cannot be determined without further information.
E)stockholder's equity is not recognized for corporations.

Question

In a corporation, when expenses are greater than revenues in a given period and there are no other gains or losses, ­­­_________________
A)stockholders' equity will not be impacted.
B)stockholders' equity will be increased.
C)stockholders' equity will be decreased.
D)the impact cannot be determined without further information.
E)stockholder's equity is not recognized for corporations.

Quizplus · Accepted Answer

In a corporation, if expenses exceed revenues in a given period and there are no gains or losses, stockholders' equity will be decreased.
Key Takeaway: A loss by a corporation impacts stockholder equity and causes it to decrease. If the corporation recognizes a profit, that profit increases the stockholder's equity. The decrease to the equity account is done by a debit entry, while the increase would be recognized with a credit entry.

In a Corporation, When Expenses Are Greater Than Revenues in a Given