The Following Is True If Land Is Sold Except

question 30

Multiple Choice

The following is true if land is sold except:

• A) The gain on the sale of land used in a business is recorded on Form 4797.
• B) The gain on the sale of land used in a business is recorded on Schedule
• C) The gain on the sale of land used in a business is ordinary income and can appear on a Schedule C if it is owned by a sole proprietor.
• D) The gain on the sale of land appears on the Form 1040 under the heading "other income".

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Definitions:

FIFO Method

A method of inventory valuation that assumes the first items placed in inventory are the first sold, hence, the cost of the oldest inventory is used to determine the cost of goods sold.

Process Costing

A costing method used where similar products are produced continuously, allocating production costs based on the process or department.

Conversion Cost

The total cost of transforming raw materials into finished goods, including labor and manufacturing overhead.

Conversion Costs

The combined costs of direct labor and manufacturing overhead incurred to convert raw materials into finished products.