The Income Statement Presents a Summary of an Entity's Revenues

question 68

Multiple Choice

The income statement presents a summary of an entity's revenues and expenses for a period of time.Which of the following statements is TRUE?

• A)There is profit when total revenues are greater than total expenses.
• B)There is a loss when total expenses are greater than total revenue.
• C)There is a loss when withdrawals are made.
• D)Both A and B are true.

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Definitions:

Net Income

The total profit of a company after all expenses and taxes have been subtracted from revenue.

Return On Investment

A financial metric used to evaluate the efficiency of an investment, calculating profit or loss relative to the amount of money invested.

Departmental Income Statement

A financial statement that shows the income, expenses, and net income of different departments within a company.

Contribution To Overhead

The portion of revenue that exceeds direct costs and contributes to covering a company's fixed expenses.