IAS 2 Requires That Fixed Manufacturing Costs Be Excluded from the Cost

question 6

True/False

IAS 2 requires that fixed manufacturing costs be excluded from the cost of inventories,as they cannot be allocated accurately.

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Definitions:

Preferred Shares

A class of ownership in a corporation that has a higher claim on its assets and earnings than common shares, often with fixed dividends and no voting rights.

Basic Earnings

Basic earnings typically refers to the net income of a company, calculated before any effects of preferred dividends, divided by the weighted average number of common shares outstanding.

Net Income

The total profit of a company after all expenses, taxes, and costs have been subtracted from total revenue, indicating the company's financial performance over a period.

Common Shares

Equity securities that represent ownership in a company, entitling holders to vote at shareholder meetings and receive dividends.