Answered: What is the positive difference that…

Understanding Business

12th Edition

ISBN:9781259929434

Author:William Nickels

Publisher:William Nickels

Chapter1: Taking Risks And Making Profits Within The Dynamic Business Environment

Section: Chapter Questions

Problem 1CE

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20 -

What is the positive difference that occurs by subtracting the total expenses incurred from the total revenues of the business?

Snow

B)	Investment

NS)

Growth

Capital

TO)

Damage

Expert Solution

Step 1

Total revenue is defined as the total amount produced after selling certain unit of products in a business. While total expense is the total cost incurred to carry out the business. It is to be noted that total revenue is not the profit earned by a company. To find gross profit or total loss you need to take the difference between the total revenue and total expenses. For a business to be running successfully the difference between the revenue and cost must always be positive and this means that the company is earning profits. If this value is negative for a longer period, due to continuous loses incurred, the company may even have to be shut down.

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