Which of the Following Statements Is True Regarding the Reporting

question 40

Multiple Choice

Which of the following statements is true regarding the reporting of discontinued operations?

• A)The impact that the discontinued operations had on any previous year results is not shown for comparative purposes.
• B)The income or loss, net of taxes, of the discontinued operations is reported as a separate component of income from continuing operations.
• C)Earnings per share data are not reported separately for discontinued operations.
• D)By reporting discontinued operations as a separate item, net of taxes, all of the effects of the discontinued business segment are excluded from the revenues, expenses, gains, and losses of continuing operations.

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Definitions:

Direct Materials

Raw materials that can be directly linked to the production of a specific product.

Fixed Overhead

Regular, ongoing expenses that are not affected by changes in production level or output, such as rent and insurance.

Variable Overhead

Costs that change in proportion to the level of production activity or volume, such as power for manufacturing equipment.

Direct Labor

The labor costs directly associated with the production of goods or services, which includes wages for workers who physically contribute to the finished product.