Which of the Following Should Be Reported Net of the Related

question 135

Multiple Choice

Which of the following should be reported net of the related income tax effect on the income statement?

• A) sale of an inventory item at a loss
• B) loss due to theft
• C) loss due to a discontinued operations of the business
• D) sale of a temporary investment at a loss

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Definitions:

Marginal Social Benefit

Marginal social benefit is the additional gain to society as a whole from an additional unit of a good or service.

Socially Optimal

Refers to a situation where goods or services are produced and consumed at a level that maximizes overall social welfare.

Pollution

The contamination of the environment with harmful or poisonous substances, adversely affecting the health of living organisms and ecosystems.

External Costs

Costs of an economic activity that are not borne by the participants but rather by other people or society at large.