Which of the Following Would Give Rise to Abnormal Earnings

question 23

Multiple Choice

Which of the following would give rise to abnormal earnings?

• A)Accelerated depreciation
• B)LIFO costing for inventories and cost of goods sold
• C)Immediate write-off of research and development
• D)All of the above

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Definitions:

Income Taxes

Taxes levied by the government on the income generated by businesses and individuals, which vary by income levels and jurisdictions.

Ending Inventory

The total value of goods available for sale at the end of an accounting period, calculated by adding new purchases to the starting inventory and subtracting goods sold.

Inventory Valuation Methods

Techniques used to calculate the cost of goods sold and ending inventory, such as FIFO (First-In, First-Out), LIFO (Last-In, First-Out), and average cost methods.

Gross Profit Method

An accounting technique used to estimate the amount of ending inventory and cost of goods sold, based on the gross profit margin.