If a restaurant's expenses exceed its sales, how is the operation described?

If a restaurant's expenses exceed its sales, how is the operation described?

• A. A profit
• B. A loss
• C. A surplus
• D. A break-even

Answer: (B)

Net income for a business is the result of subtracting expenses from sales. When expenses exceed sales, that difference is negative, which is described as a loss. In other words, the operation spends more money than it brings in. The opposite happens when sales surpass expenses, yielding a profit, and they are equal at break-even. A surplus isn’t the standard term used to describe a restaurant’s bottom line. For example, if a restaurant has 120 in sales but 130 in expenses, the net is -10, a loss.

Net income for a business is the result of subtracting expenses from sales. When expenses exceed sales, that difference is negative, which is described as a loss. In other words, the operation spends more money than it brings in. The opposite happens when sales surpass expenses, yielding a profit, and they are equal at break-even. A surplus isn’t the standard term used to describe a restaurant’s bottom line. For example, if a restaurant has 120 in sales but 130 in expenses, the net is -10, a loss.