Which of the Following BEST Describes Operating Income

question 99

Multiple Choice

Which of the following BEST describes operating income?

• A) The gains and losses from transactions that are not part of the normal operations of the business
• B) The income or loss from segments of the business that have been sold or terminated
• C) The income or loss generated from unusual or infrequent events
• D) The income or loss generated from the normal operations of the business

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Definitions:

Manufacturing Overhead

Indirect factory-related costs that are incurred when producing a product, such as utilities, maintenance, and quality control.

Indirect Materials

Materials used in the production process that cannot be directly linked to a specific product, such as lubricants and cleaning supplies used in a factory.

FIFO Method

An inventory valuation method where the first items placed in inventory are the first ones sold or used out; FIFO stands for “First In, First Out”.

Work In Process

This term is often used interchangeably with Work In Progress, denoting goods that are partially completed in the manufacturing process.