Which of the Following Is a Required Disclosure in the Income

question 125

Multiple Choice

Which of the following is a required disclosure in the income statement when reporting the sale of a component of the business?

• A) The gain or loss on sale should be reported as a component of other comprehensive income
• B) Both the results of operations of the discontinued component and also the gain or loss on the sale should be reported as components of other comprehensive income.
• C) Earnings per share from both income from continuing operations and net income should be disclosed on the face of the income statement.
• D) Revenue and expenses applicable to the discontinued operations should be disclosed in the income statement.

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Definitions:

Overapplied Overhead

Occurs when the allocated overhead costs exceed the actual overhead costs incurred.

Net Operating Income

Represents the profit earned from a company's core business operations, excluding expenses and revenues from non-operating activities.

Job-Order Costing

A cost accounting system that assigns manufacturing costs to an individual product or batch of products, typically used when the products being produced are sufficiently different from each other.

Work in Process Inventory

The total value of all partially completed goods or work that is not yet finished within a production process.