Final Answer:
The business incurred a net loss of $8,000, calculated as total revenues ($55,000) minus total expenses ($63,000).
Step-by-step explanation:
Net income (or net loss) is determined by subtracting total expenses from total revenues. In this case, the business's total revenues are $55,000, and its total expenses amount to $63,000. The formula for net income (or net loss) is:
Net Income (or Net Loss)
=
Total Revenues
−
Total Expenses
Net Income (or Net Loss)=Total Revenues−Total Expenses
Substituting the given values:
\text{Net Income (or Net Loss)} = $55,000 - $63,000
Calculating this yields a result of -$8,000, indicating a net loss of $8,000 for the business.
Understanding the net income (or net loss) is crucial for assessing a business's financial performance. In this scenario, the negative value signifies that the total expenses exceeded the total revenues, resulting in a net loss of $8,000. This information is valuable for business owners and stakeholders, helping them make informed decisions to improve financial health and sustainability.