This is estimated by subtracting all costs from the expected revenues.

This is estimated by subtracting all costs from the expected revenues.

• A. Cash Flow
• B. Profitability
• C. Capital
• D. Sole Proprietorship

Answer: (B)

Profitability is the measure of earnings after subtracting all costs from expected revenues. When you estimate profitability, you’re looking at what remains as profit after selling goods or services and covering the costs tied to that activity. This is essentially revenue minus costs, showing how much the venture would keep as profit. Cash flow, by contrast, tracks actual cash that moves in and out, which can differ from profitability due to timing of receipts and payments as well as non-cash items. Capital refers to the funds or assets available for investment and does not describe a profit calculation. A sole proprietorship is a business structure, not a profit-measure metric. So the statement best identifies profitability.

Profitability is the measure of earnings after subtracting all costs from expected revenues. When you estimate profitability, you’re looking at what remains as profit after selling goods or services and covering the costs tied to that activity. This is essentially revenue minus costs, showing how much the venture would keep as profit.

Cash flow, by contrast, tracks actual cash that moves in and out, which can differ from profitability due to timing of receipts and payments as well as non-cash items. Capital refers to the funds or assets available for investment and does not describe a profit calculation. A sole proprietorship is a business structure, not a profit-measure metric. So the statement best identifies profitability.