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

question 114

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

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Definitions:

Authorized

Officially given permission or power to do something or to act in a certain capacity.

Implied Authority

Authority that is created not by an explicit oral or written agreement but by implication or inference. In agency law, implied authority of the agent can arise from custom, from the position the agent occupies, or from being reasonably necessary to carry out express authority.

Express Authority

Authority expressly given by one party to another. In agency law, an agent has express authority to act for a principal if both parties agree, orally or in writing, that an agency relationship exists in which the agent has the power (authority) to act in the place of, and on behalf of, the principal.

Exclusive Territory

A designated area or market granted to an individual or entity with the exclusive right to sell or distribute goods or services within it.