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ACCA Knowledge Level Net Income—A Critical Amount — practice questions

Explore 1 free Net Income—A Critical Amount questions in ACCA Knowledge Level Financial Accounting. Open each question or exercise to read its content, reference answers and available explanation.

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Net Income—A Critical Amount questions and exercises with answers

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A business has total revenue of $48,000 and total expenses of $52,000 for a month. What is the result for that month?Read the answer and worked solution →

Worked practice questions

A business has total revenue of $48,000 and total expenses of $52,000 for a month. What is the result for that month?

  1. Net loss of $4,000
  2. Net income of $4,000
  3. Net income of $100,000
  4. Net loss of $100,000
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Correct answer: A. Net loss of $4,000

1. Net income is calculated as $\text{Revenue} - \text{Expenses}$. 2. Substitute: $48{,}000 - 52{,}000 = -4{,}000$. 3. A negative result means expenses exceeded revenue, which is a net loss. 4. The loss equals $4{,}000, ruling out the $100,000 options that wrongly add the figures. 5. Therefore the month shows a net loss of $4,000. _Source: Jonick, Principles of Financial Accounting (CC BY-SA 4.0), §1.2 "Net Income—A Critical Amount", p.12_

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