What is the term used when a business makes a loss?

What is the term used when a business makes a loss?

• A. Shows a profit
• B. Breaks even
• C. Runs at a loss
• D. Capitalizes

Answer: (C)

A business incurs a loss when its costs exceed its revenues, meaning expenses outpace income. The term used to describe that situation is running at a loss. This is distinct from breaking even, where revenue exactly covers costs, and from showing a profit, where revenue exceeds costs. Capitalizes isn’t about loss; it relates to funding or recording an asset or taking advantage of an opportunity. For example, if monthly revenue is 60,000 and expenses are 75,000, the business runs at a loss.

A business incurs a loss when its costs exceed its revenues, meaning expenses outpace income. The term used to describe that situation is running at a loss. This is distinct from breaking even, where revenue exactly covers costs, and from showing a profit, where revenue exceeds costs. Capitalizes isn’t about loss; it relates to funding or recording an asset or taking advantage of an opportunity. For example, if monthly revenue is 60,000 and expenses are 75,000, the business runs at a loss.