According to the FASB Conceptual Framework,the Concept of "Earnings

question 64

Multiple Choice

According to the FASB conceptual framework,the concept of "earnings"

• A) includes changes in market values of investments in marketable securities classified as available-for-sale.
• B) includes foreign currency translation adjustments.
• C) includes gains and losses resulting from the sale of a productive asset to another party in an arm's-length transaction.
• D) is the same as comprehensive income.

---

Definitions:

Overapplied

A scenario in which the overhead cost assigned to manufacturing exceeds the overhead that was actually incurred.

Direct Labor-Hours

A measure of the labor directly involved in manufacturing a product, represented in hours.

Predetermined Overhead Rate

A rate calculated before a period begins, based on estimated overhead costs and activity levels, used to allocate overhead to products.

Actual Manufacturing Overhead

The real costs incurred in the manufacturing process that are not directly tied to production, including utilities, maintenance, and factory rent.