Which of the Following Statements Is Correct Regarding the Sale

question 79

Multiple Choice

Which of the following statements is correct regarding the sale of ordinary assets as discussed in this chapter?

• A)The sale of an asset (held less than a year)outside the normal course of a trade or business is a sale of an ordinary asset.
• B)The sale of any business property regardless of holding period is a sale of an ordinary asset.
• C)The sale of inventory for a profit is considered to be a sale of an ordinary asset.
• D)The sale of business property held for more than a year is a sale of an ordinary asset.

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Definitions:

Direct Labor-Hours

The total hours worked by employees directly involved in the manufacturing process or providing a service, used as a basis for allocating labor costs.

Fixed Manufacturing Overhead

Costs related to the production process that do not vary with the volume of production, such as rent, depreciation, and salaries of permanent staff.

Variable Overhead Rate

The rate at which variable overhead costs are allocated to production, based on a predetermined base such as direct labor hours or machine hours.

Direct Labor-Hours

The total hours worked by employees directly involved in the production process.