What is the main benefit of recording expenses in a small business?
Answer and explanation
Correct answer: It helps determine cost and profit correctly
An expense record shows how much money the business has spent and the purposes for which it was spent. When these records are compared with sales revenue, the owner can estimate total cost and determine whether the business has earned a profit or suffered a loss. Therefore, option A is correct. Recording expenses does not automatically attract customers, make goods free, or remove every business risk.
Frequently asked questions
What is the correct answer to this question?
It helps determine cost and profit correctly
Why is this the correct answer?
An expense record shows how much money the business has spent and the purposes for which it was spent. When these records are compared with sales revenue, the owner can estimate total cost and determine whether the business has earned a profit or suffered a loss. Therefore, option A is correct. Recording expenses does not automatically attract customers, make goods free, or remove every business risk.
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.
