Asked by Aaron Russell on May 23, 2024
Verified
Expenses always decrease equity.
Equity
The residual interest in the assets of an entity after deducting liabilities, representing ownership interest in a company.
Expenses
Financial outlays that are necessary for the operations of a business, which can include both fixed and variable costs.
- Acquire knowledge on the division and acknowledgment of revenues and expenses and their effects on equity.
Verified Answer
KH
Karandeeep HandaMay 24, 2024
Final Answer :
True
Explanation :
Expenses are the costs incurred by a company in order to generate revenue. When expenses are subtracted from revenue, the result is net income, which increases equity. However, if expenses are greater than revenue, the result is a net loss, which decreases equity. Therefore, expenses can decrease equity.
Learning Objectives
- Acquire knowledge on the division and acknowledgment of revenues and expenses and their effects on equity.