Net Income Is ________

question 81

Multiple Choice

Net income is ________.

• A) the accounting profit from the operations of the company during the period
• B) cash flow
• C) the accounting profit from the non-operating assets of the company during the period
• D) always the dividends paid shareholders

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Definitions:

Absorption Costing

A calculation method in accounting that compiles all production-related costs, namely direct materials, direct labor, and every overhead cost (both variable and fixed), into the product's pricing.

Variable Costing

An accounting method that includes only variable production costs (direct materials, direct labor, and variable manufacturing overhead) in the cost of goods sold and treats fixed manufacturing overhead as an expense of the period.

Unit Product Cost

The total cost (both variable and fixed) associated with producing a unit of product, including materials, labor, and overhead.

Variable Costing

Accounting method that considers only variable costs (costs that change with production volume) in the calculation of product cost, excluding fixed costs.