A Company Earned $2,000 in Net Income for October

question 182

Multiple Choice

A company earned $2,000 in net income for October. Its net sales for October were $10,000. Its profit margin is:

• A) 2%.
• B) 20%.
• C) 200%.
• D) 500%.
• E) $8,000.

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Definitions:

Loss On Realization

Loss on realization occurs when the proceeds from the sale of an asset are less than its carrying amount on the books, leading to a financial loss.

Deficit

The amount by which expenditures exceed income or costs outstrip revenues, resulting in a negative balance.

Liquidation

The process of closing a business, selling its assets to pay off debts, and distributing the remaining assets to owners or shareholders.

Profit And Loss Percentages

Are critical figures that represent the percentage of profit or loss a business generates from its operations, relative to its revenues.