Question

Which situation indicates a net loss within the Income Statement section of the​ worksheet? A. Total debits exceed total credits B. Total credits exceed total debits C. Total debits equal total credits D. None of the above

Answer 1

A. Total debits exceed total credits

Step-by-step explanation:

The income statement shows the revenue/income generated and expenses incurred by a business over a given period of time.

Whilst revenue/income are recognized as credit entries, expenses are recognized as debits.

Where the total expenses is higher than the total sales, the company is said to have made a loss, otherwise, a profit.

Hence a net loss is when Total debits exceed total credits.