The Primary Difference Between Revenues and Gains Is

question 5

Multiple Choice

The primary difference between revenues and gains is:

• A)Gains are increases in net assets from periodically selling assets (other than inventory),while revenues are increases from major or central ongoing operations of a business.
• B)Revenues increase operating income and gains have no impact on net income.
• C)Revenues cause increases in net assets as a result of infrequent activities and gains cause increases through ongoing activities.
• D)Gains result in an increase in operating income whereas revenues do not impact operating income.

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Definitions:

Return on Investment

A measure of the profitability or efficiency of an investment, calculated as the net profit from the investment divided by its cost.

Residual Income

Operating income that exceeds a set minimum return on operating assets, used as a measure of the profitability and performance of a business unit.

Division

A segment within an organization that focuses on specific products, services, territories, or customers, usually with its own set of management and financial goals.

Division's Margin

The profit margin measured at the divisional level, reflecting the division's ability to generate profit from its revenues.