If an entrepreneur spends without keeping records, what problem is most likely?
Answer and explanation
Correct answer: Profit and loss cannot be measured correctly
Financial records show the amount and purpose of money received and spent. Without them, the entrepreneur cannot reliably compare revenue with total cost, identify waste, prepare budgets, or know whether the enterprise is making a profit or loss. Unrecorded spending does not reduce expenses, increase customers, or remove risk. Accurate records support informed financial decisions.
Frequently asked questions
What is the correct answer to this question?
Profit and loss cannot be measured correctly
Why is this the correct answer?
Financial records show the amount and purpose of money received and spent. Without them, the entrepreneur cannot reliably compare revenue with total cost, identify waste, prepare budgets, or know whether the enterprise is making a profit or loss. Unrecorded spending does not reduce expenses, increase customers, or remove risk. Accurate records support informed financial decisions.
Which subject and chapter does this question cover?
This is a Class 11 Business Studies question. Chapter: Sources of Business Finance. Topic: Concept, nature and importance of business finance.
