McCartney Consulting Group is a management-consulting firm that provides its expertise to businesses that employ its services. Since it does not hold an inventory of goods or produce any goods itself:
A) its revenue will equal its net income.
B) its gross profit could be identical to its net revenue.
C) it is unlikely to have any operating expenses.
D) its balance sheet will not record any current assets.

Question

Quizplus · Accepted Answer

Since McCartney Consulting Group does not hold an inventory of goods or produce any goods itself, its revenue will be equal to its net revenue. As a result, its gross profit could be identical to its net revenue. However, the company will have operating expenses related to consulting services, such as salaries for employees and office rent. Therefore, it will have some operating expenses. The company may have current assets such as cash, accounts receivable, and prepaid expenses, which will be recorded on its balance sheet.

McCartney Consulting Group Is a Management-Consulting Firm That Provides Its