Question

Which of the following is true of differential income (or loss)? a. It is the amount...

Which of the following is true of differential income (or loss)?

a. It is the amount of increase or decrease in cost that is expected from a course of action as compared to an alternative.

b. It is the difference between differential revenue and differential cost.

c. It is the amount of increase or decrease in revenue that is expected from a course of action as compared to an alternative.

d. It is the difference in incomes or losses of the current year and the previous year.

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Answer #1

Answer : (b) It is the difference between differential revenue and differential cost.

Explanation :
Option (a) is wrong as amount of increase or decrease in cost that is expected from a course of action as compared to an alternative is differential cost.
Option (c) is wrong as amount of increase or decrease in revenue that is expected from a course of action as compared to an alternative is differential Revenue.
Option (d) is wrong as difference in incomes or losses of the current year and the previous year is just increase or decrease in income in current year

Option (b) is right as difference in differential revenue and differential cost is termed as differential income (or loss)

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