Expenses

Question

Expenses

Quizplus · Accepted Answer

Expenses are the costs that a company incurs during the accounting period in order to generate revenue. They are reported in the income statement for the period in which they are incurred, and their total amount is deducted from the company's revenue to determine its net income or loss. This, in turn, affects the company's shareholder equity, as a decrease in net income will result in a decrease in equity. Therefore, option D best represents the relationship between expenses and their impact on a company's financial statements.