Financial Statement Elements Relating to Income Are Defined in FASB

question 71

Multiple Choice

Financial statement elements relating to income are defined in FASB Concepts Statement 6 as follows:

• A) Gains are increases in equity from ongoing major or central operations of an entity.
• B) Expenses are outflows of assets or liabilities incurred from peripheral or incidental transactions of an entity.
• C) Revenues are inflows or other enhancements of assets or settlements of liabilities from ongoing major or central operations.
• D) Losses are all decreases in equity other than from transactions with owners.

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Definitions:

Direct and Indirect Costs

Direct costs are directly traceable to a product or service, while indirect costs are not directly attributable to a single product or service, such as overhead expenses.

Business Combination

A transaction or other event in which an acquirer gains control over one or more businesses, which can include mergers, acquisitions, and consolidations.

Stockholders' Equity

The ownership interest of shareholders in a corporation, represented by the company's assets minus its liabilities.

Common Stock

Shares representing ownership in a company, giving holders voting rights and a share in the company's profits through dividends.