Why should an entrepreneur keep records of expenses and income?

Correct answer: To understand financial condition

Direct answer: Option B, understanding the financial condition. An entrepreneur must know how much money enters the business and how much leaves it. A simple record of sales, purchases, wages, transport, rent and other expenses helps calculate income, cost, profit or loss. Step by step, the entrepreneur writes each transaction, adds total income, adds total expenses, and compares the two. If income is greater, there may be profit; if expenses are greater, there may be a loss. Option A is wrong because increasing expenses without reason weakens the business. Option B is correct because records show the real financial position and support sensible decisions. Option C is wrong because accounting does not mean avoiding customers; customer contact is necessary. Option D is wrong because records help improve or continue work, not stop it. Memory cue: income minus expenses helps reveal the business result.