If a company's revenues are higher than its expenses, it will cause
A) an increase in owner's equity.
B) a decrease in owner's equity.
C) an increase in assets.
D) no effect on owner's equity.

Question

Quizplus · Accepted Answer

If a company's revenues are higher than its expenses, it means the company has made a profit. This profit increases the owner's equity, which is the amount of money the owner has invested in the business. Therefore, the correct choice is A, an increase in owner's equity.

If a Company's Revenues Are Higher Than Its Expenses, It