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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?
ANet loss of $4,000
BNet income of $4,000
CNet income of $100,000
DNet loss of $100,000
Answer & Solution
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_