An Example of an Unusual and Infrequent Gain or Loss

question 107

Multiple Choice

An example of an unusual and infrequent gain or loss is:

• A)A large loss arising from inability to collect an account receivable from a bankrupt customer.
• B)A large gain from disposal of a segment of the business.
• C)A gain or loss from sale of an expensive machine no longer needed in the business.
• D)A loss due to restructuring charges.

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Definitions:

Fixed Cost

Expenses that do not change with the level of production or sales over a certain period, such as rent or salaries.

Output

The amount of goods or services produced by a person, machine, or industry.

Marginal Product

Marginal product refers to the additional output generated by employing one more unit of a specific factor of production, holding all other factors constant.

Labor

The exertion of mental or physical strength by humans to create goods and services.