Which One of the Following Correctly Reflects the Effects on the Financial

question 58

Multiple Choice

Which one of the following correctly reflects the effects on the financial statements caused by the increase in the market price of long-term available-for-sale securities?

• A) Current ratio is unchanged and earnings per share increases.
• B) Current ratio and earnings per share increase.
• C) Current ratio and earnings per share are unchanged.
• D) Current ratio is unchanged and earnings per share decreases.

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Definitions:

Variable Manufacturing Overhead

Costs in the production process that change with the volume of production, such as utility costs or raw materials.

Predetermined Overhead Rates

Estimated rates used to allocate overhead costs to products or activities, based on selected bases like labor hours or machine hours.

Machine-Hours

A unit measure representing the operating time of machinery, used in calculating production costs and allocating expenses based on machine usage.

Molding

The process of shaping a material by introducing it into a rigid frame called a mold.