Which One of the Following Is a Nonoperating Event That

question 27

Multiple Choice

Which one of the following is a nonoperating event that must be reported on the income statement?

• A)Acquisition of a plant asset to be used in operations
• B)Interest revenue
• C)Recognition of inventory expense
• D)Consumption of office supplies

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Definitions:

Absorption Costing

An accounting method that includes all manufacturing costs (direct materials, direct labor, and both variable and fixed manufacturing overhead) in the cost of a product.

Unit Product Cost

The total cost (both fixed and variable) associated with producing a single unit of a product.

Unit Product Cost

The total cost involved in manufacturing or producing one unit of a product, including materials, labor, and overhead.

CM Ratio

Stands for Contribution Margin Ratio; it is a financial metric that measures the proportion of revenue that exceeds variable costs and contributes to covering fixed costs and generating profit.