Which of the Following Is Correct Regarding Gain or Loss

question 94

Multiple Choice

Which of the following is correct regarding gain or loss on disposal of a long-lived asset?

• A)Failure to report a gain on the sale of an asset results in an overstatement of net income.
• B)Failure to report a gain on the sale of an asset results in an understatement of stockholders' equity.
• C)Failure to report a loss on the sale of an asset results in an understatement of net income.
• D)Failure to report a loss on the sale of an asset results in an understatement of earnings per share.

---

Definitions:

Perfectly Competitive

A market structure characterized by a large number of firms selling identical products, with no single firm able to influence the market price.

Oligopolistic

Describes a market structure in which a few firms dominate the industry, leading to limited competition.

Marginal Cost

The rise in overall expenses resulting from the manufacture of an extra unit of a product or service.

Collude

To collude means to cooperate or conspire in secret, especially with the intention to cheat or deceive others, such as companies agreeing to fix prices.