The Gain or Loss on the Disposal of a Business

question 16

Multiple Choice

The gain or loss on the disposal of a business segment is shown on the income statement as:

• A)an extraordinary item.
• B)part of discontinued operations
• C)part of income from operations.
• D)other gains or losses.

---

Definitions:

Work in Process

Inventory consisting of items still in the production process, not yet completed but having incurred some direct material, labor, or overhead costs.

Manufacturing Overhead

These are all the indirect costs associated with the production process, excluding direct materials and direct labor.

Cost of Goods Sold

The immediate expenses linked to the manufacturing of a company's sold products, covering the cost of materials and labor directly engaged in the product's creation.

Work in Process

Stock consisting of materials that are in the process of being transformed into final products but have not reached completion.