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

question 98

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 of an income statement?

• A)There is net income when total revenues are lesser than total expenses.
• B)There is a net loss when total expenses are lesser than total revenue.
• C)There is a net loss when total expenses are greater than total liabilities.
• D)There is net income when total revenues are greater than total expenses.

---

Definitions:

Price of Capital

The cost incurred to use capital goods for production, often determined by interest rates and market demand.

Total Expenditures

The total amount of money spent by a firm or an individual on goods and services.

Price of Labor

The wage rate or compensation paid to employees for their work or services, determined by supply and demand in the labor market.

Isocost Line

A line that represents all combinations of inputs which cost the same total amount.