When Would a Company Report a Net Loss on the Income

question 44

Multiple Choice

When would a company report a net loss on the income statement?

• A)When revenues are less than the sum of expenses plus dividends during an accounting period.
• B)If assets decreased during an accounting period.
• C)If liabilities increased during an accounting period.
• D)When expenses exceeded revenues for an accounting period.

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Definitions:

GAAP Conservatism

An accounting principle that entails erring on the side of caution, providing for potential losses or liabilities.

R&D

Research and Development; activities undertaken by a business to innovate and introduce new products or services.

Software Development

The process of conceiving, specifying, designing, programming, documenting, testing, and bug fixing involved in creating and maintaining applications, frameworks, or other software components.

Intangible Assets

Assets that lack physical substance, such as patents, trademarks, and goodwill.