In other words, profit increases what the business owes the owner and a loss decreases what the business owes the owner. If Revenues are more than Expenses, there is Profit . If Expenses are more than Revenues, there is Loss . Carried one step further, then, Revenues increase Owner's Equity and Expenses decrease Owner's Equity. Revenues are what the business earns for doing what it is in business to do.
Expenses are the cost of assets the business uses to generate Revenues.
The reports are called financial statements and there are different financial statements to report different things. The Balance Sheet reports what Assets, Liabilities and Owner's Equity the business has as of a certain date . Go to Questions . To achieve the greatest benefit of this tutorial, work through all of the questions. Read the question and study each answer carefully.