If the Recognized Losses Resulting from Involuntary Conversions Arising from Casualty

question 23

True/False

If the recognized losses resulting from involuntary conversions arising from casualty or theft exceed the recognized gains from such events (i.e.,a net loss from the casualty),all of the involuntary conversions are treated as ordinary gains and losses.

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Definitions:

Profits

The financial gain realized when the revenue generated from a business activity exceeds the expenses, costs, and taxes needed to sustain the activity.

Long Run

In microeconomics, a period of time long enough to enable producers of a product to change the quantities of all the resources they employ, so that all resources and costs are variable and no resources or costs are fixed.

Production Plant

A facility or set of facilities where goods are manufactured or assembled primarily from raw materials.

Economic Profit

The return flowing to those who provide the economy with the economic resource of entrepreneurial ability; the total revenue of a firm less its economic costs (which include both explicit costs and implicit costs); also called “pure profit” and “above-normal profit.”