The Following Information Applies to the Operations of MK Inc

question 43

Multiple Choice

The following information applies to the operations of MK Inc. for 2018 and 2019. Assume a tax rate of 25% for both years.
2018 information:
Sales on account in the amount of $660,000
Warranty expense and associated liability in the amount of $110,000
No other expenses incurred.

2019 information:
Sales on account in the amount of $205,000
Warranty repairs made in the amount of $63,000
No expenses incurred.

What is MK's book income for 2018?

• A) $550,000
• B) $660,000
• C) $770,000
• D) $597,000

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Definitions:

Return On Plan Assets

A measure of the earnings generated from the investments within a pension fund, indicating the efficiency and performance of the asset management.

Pension Expense

The cost recognized in an employer's financial statements for the benefits provided to employees during a period.

Defined Contribution

A type of retirement plan where the amount invested is defined, but the future benefits are not guaranteed and depend on investment performance.

IFRS

International Financial Reporting Standards, a set of accounting standards developed by the International Accounting Standards Board (IASB).