The Condensed Income Statement for a Fletcher Inc

question 72

Multiple Choice

The condensed income statement for a Fletcher Inc.for the past year is as follows: Management is considering the discontinuance of the manufacture and sale of Product G at the beginning of the current year.The discontinuance would have no effect on the total fixed costs and expenses or on the sales of Products F and H.What is the amount of change in net income for the current year that will result from the discontinuance of Product G?

• A)$20,000 increase
• B)$30,000 increase
• C)$20,000 decrease
• D)$30,000 decrease

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Definitions:

Liabilities

Financial obligations or debts that a company or individual owes, which are required to be paid in the future.

Beginning Equity

The value of an owner's interest in a company at the start of an accounting period, before any transactions affecting equity occur.

Net Income

The total profit of a company after all expenses, taxes, and costs have been subtracted from total revenue.

Dividends

Disbursements from a corporation to individuals holding its stock, serving as their share of the earnings.