Question

Tania, a management accountant in a cosmetics company, is asked by her manager to calculate the profit or loss earned by the company in a given time period. To get the required information, Tania is most likely to: a. subtract the company's expenses from its revenue. b. subtract operating costs from the company's retained earnings. c. add the company's current liabilities to its accounts receivable. d. multiply the revenue of the company with its retained earnings.

Answer 1

Answer:

a. subtract the company's expenses from its revenue.

Explanation:

For computing the profit or loss we simply deduct all the expenses incurred from the revenue earned.

If the revenue is more than the expenses than it would profit to the company

And, if the revenue is less than the expenses than it would be loss suffered by the company

In mathematically,

Net income = Total revenues earned - all expenses incurred

And, the net loss = All expenses incurred - total revenues earned

Hence, the first option is correct