Asked by Nakaila Lovett on Jun 25, 2024
Verified
Decreases in equity from costs of providing products or services to customers are called:
A) Liabilities.
B) Equity.
C) Withdrawals.
D) Expenses.
E) Stockholders' Investment.
Expenses
Costs incurred by a business in the process of earning revenue, including costs such as rent, utilities, and salaries.
Equity
The remaining interest in a company's assets after all debts are subtracted, signifying the owner's stake in the business.
- Understand the key concepts behind revenue and expense recognition and their ramifications for equity.
Verified Answer
GG
gurpinder grewalJun 27, 2024
Final Answer :
D
Explanation :
Expenses are costs incurred in the process of generating revenue, including costs associated with manufacturing, marketing, and distributing products or services to customers. These expenses reduce the company's equity because they decrease the company's net income, which is a component of equity on the company's balance sheet.
Learning Objectives
- Understand the key concepts behind revenue and expense recognition and their ramifications for equity.