A loss is recognized in accounting when:

• A. Assets exceed liabilities at the end of the period.
• B. Revenues exceed expenses during a specific period.
• C. Expenses exceed revenues during a specific period.
• D. Liabilities are less than assets.

Answer: (C)

Verified step by step guidance

1. Understand the concept of a loss in accounting: A loss occurs when expenses exceed revenues during a specific period. This means the business has spent more than it has earned in that timeframe.
2. Review the definitions of key terms: 'Expenses' refer to costs incurred by the business to generate revenue, while 'Revenues' refer to the income earned from business activities.
3. Analyze the options provided: Compare each statement to the definition of a loss. For example, 'Assets exceed liabilities' refers to financial position, not performance, and 'Revenues exceed expenses' indicates a profit, not a loss.
4. Focus on the correct condition: A loss is specifically recognized when 'Expenses exceed revenues during a specific period,' as this reflects negative financial performance.
5. Apply this understanding to similar scenarios: Whenever expenses surpass revenues in a given period, it results in a loss, which is recorded in the income statement to reflect the financial outcome of operations.