Accounting for IGCSE & O level - Final Statements (Section 6 - No. 10)
If a company has a net loss for the year, where will that amount be recorded in the financial statements?
In the asset section of the balance sheet.
In the liability section of the balance sheet.
As a reduction in retained earnings on the balance sheet.
As an increase in owner's equity.
Explanation
A net loss decreases retained earnings, which is a component of owner's equity.
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