Which of the Following Would Be Classified as an Extraordinary

question 35

Multiple Choice

Which of the following would be classified as an extraordinary item?

• A)A large gift given to the company.
• B)A loss from obsolete inventory.
• C)A loss from a natural disaster that affects the company at infrequent intervals.
• D)A loss from an enacted law that made inventory unsalable.

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Definitions:

Profitability

The ability of a business to generate earnings compared to its expenses and other relevant costs incurred during a specific period.

Common Stockholders

Individuals or entities that own shares of a company's common stock, giving them voting rights and a share in the company's profits through dividends.

Price-Earnings Ratio

A valuation ratio of a company's current share price compared to its per-share earnings, often used to gauge the valuation of a company's shares.

Profitability

The degree to which a business or activity yields profit or financial gain, typically assessed through ratios such as net profit margin.