Answered: order to be classified as an…

Business

Accounting

order to be classified as an extraordinary item in the income statement, an event or transaction should be:

Principles of Accounting Volume 1

19th Edition

ISBN:9781947172685

Author:OpenStax

Publisher:OpenStax

Chapter6: Merchandising Transactions

Section: Chapter Questions

Problem 23MC: Which of the following accounts would not be reported under revenue on a simple income statement? A....

See similar textbooks

Related questions

Q: The recognition of income occurs simultaneously with the recognition of decrease in assets or…

A: Income is recognized in the books of accounts of an entity if the value of assets is increasing, or…

Q: Under FASB 52, the temporal method requires that: A. translation gains and losses are included in…

A: Since you have asked multiple questions, we will solve the first question for you. If you want any…

Q: Which statement is incorrect? *

A: Financial statement: Financial information is a written record of an organization and individual…

Q: Interest expense is listed on the Income Statement in 'Other revenue and Expenses'. Assess the…

A: Interest Expenses: The cost that an organization must pay to service its interest obligation is…

Q: Which of the following statements is not correct regarding combined statement of financial position…

A: The combined statement of financial position errors and income statement errors effects both the…

Q: If it is impracticable to determine the cumulative effect of an accounting change to any of the…

A: There are situations when company adopt to new method of accounting due to which changes occur in…

Q: True or false The income or loss reflected in the Income Statement is the result of the application…

A: The major accounting concepts are enumerated as below : a) Accrual b) Consistency c) Going concern…

Q: 8. In order to be classified as an extraordinary item in the income statement, an event or…

A: AN ITEM TO BE CLASSIFIED AS AN EXTRAORDINARY ITEM IN THE INCOME STATEMENT , AN EVENT OR TRANSACTION…

Q: Please explain the meaning of the following statement, I don't understand. The income reports net…

A: Income: It is often defined as the amount that is generated by a business from performing its…

Q: Which of the following types of information is not found in financial statements? * O Profits…

A: Financial Statements shows the financial performance and financial position of the company which…

Q: What basic characteristic distinguishes items reported onthe income statement from items reported on…

A: Balance sheet is the financial statement of a company. It helps in maintaining the records of…

Q: Withdrawals by an owner are found on the income statement as an expense True False

A: The income statement indicates the profitability of the company. The income statement contains the…

Q: What are three limitations of the income statement thatoften lead to misconceptions?

Q: What is the effect on income (overstated or understated), if the adjusting entries are notrecorded?

A: Adjusting entries: Adjusting entries are those entries which are recorded at the end of the year,…

Q: Which of the following accounts would never be reportedin the income statement as an expense?a.…

Q: Which of the following is not a pervasive expense recognition principle? a. immediate recognition…

A: Option C - Cash Payment is not a pervasive expense recognition principle.

Q: If a company failed to record an accrued income, what would be the effects?

A: Accrued income is that income which is being earned by the business for the particular period of…

Q: If total expenses exceed total revenue a net loss is reported on an income statement Select one:…

A: Net Income in the income statement is the residual income attributable to share holders Net income…

Q: These are those which do not give rise to a right to receive (or an obligation to deliver) a fixed…

A: As per IAS 21, Effects of changes in foreign exchange rates, the monetary items are those items that…

Q: The disclosure requirements for an operating segment do not include: a. Unusual items b. Income tax…

A: Operating segment is the revenue earning segment of the company which has its own expenses and…

Q: A debit balance in the Income Summary account represents a net loss. O True O False

A: The income summary account is a nominal account used to close the temporary accounts of the business…

Q: What items are not presented on the income statement?

A: Income statement:The financial statement which reports revenues and expenses from business…

Q: Which of the following statements is not correct regarding combined statement of financial position…

A: The balance sheet includes the assets, liabilities, and stockholders' equity that shows the…

Q: Which of the following is not a component of other comprehensive income under GAAP? earnings gains…

A: Other comprehensive income means those items of revenues and expenses that are not part of Profit…

Q: Under functional presentation of income statement an entity a. Shall not present additional…

A: Financial statement means the statement including income statement , balance sheet , cash flow…

Q: Which of the following is NOT true of revenue expenditure? It is an expenditure that keeps an asset…

A: Revenue expenditure is considered as a short-term expense while capital expenditure is long-term i.e…

Q: What is the total net effect on income (overstated or understated) if the adjusting entriesare not…

Q: An accrued expense can best be described as an amount Paid and currently matched with earnings…

A: Solution Concept Accrued expense Accrued expense means the expense that has already been incurred…

Q: Why should inventories be included in (a) a statement offinancial position and (b) the computation…

Q: A prior period error is not included in profit or loss but treated as an adjustment of the beginning…

A: The prior period error includes errors such as the omission of an accounting entry, wrong posting in…

Q: A gain or loss from a transaction that is unusual in nature or infrequent in occurrence should be…

A: Unusual and infrequent transactions are those transactions which are not regular in nature and will…

Q: which of the following is an accounting concept which serves as the basis for revenue and expense…

A: Accounting principles: Accounting principles are the conventions or rules that must be followed in…

Q: What is the purpose of arranging an income statement toshow subtotals for income from continuing…

A: Income statement is prepared to compute the total net profit or loss generated or incurred during an…

Q: Is a transaction that has the effect of lowering an asset recorded as a debit or as a credit? Is the…

A: A transaction is a business engagement that has an economic effect on a financial statement and is…

Q: What is meant by the terms elements and items as theyrelate to the income statement? Why might items…

Q: Under accrual accounting, which of the following is an appropriate accounting policy regarding…

A: Accrual basis: It is one of the methods of basis of accounting that records the transactions basing…

Q: On the multiple-step income statement, which of the following would be the least likely to be found…

A: Other losses and incomes head in the multistep income statement shows all the expenses and revenues…

Q: The concept of materiality: a Treats as material only those items that are…

A: The materiality concept in accounting states that all the items that are material to the company…

Q: Which of the following is not an element of the income statement? Revenues. Liabilities. Expenses.…

A: Business companies compile income statements in order to determine how much gross profit or net…

Q: Explain the transaction approach to measuring income.Why is the transaction approach to income…

A: Transaction approach:

Q: Theseransactions which are related to revenue or expense recognition, identify whether they are are…

A: Accruals: Accruals are the revenues that are earned but not received, and expenses that are incurred…

Q: What is the accounting treatment for discontinued operations? A : It is reported at its gross…

A: In the today's world, it is possible that an entity of group is not earning profit due to several…

Q: Unearned income is credited to the Profit and loss account. Do you agree with the statement?

A: Unearned income is the revenue received in advance for services to rendered in future. For example,…

Q: Define extraordinary items. How are extraordinaryitems distinguished from items that are presented…

A: Extraordinary items are those item that are unusual and that are not expected by the management of…

Q: If the accountant forgot to record the consumed portion of supplies, this will result in An…

A: at the year-end the amount of supplies consumed must be charged to income statement.

Question

In order to be classified as an extraordinary item in the income statement, an event or transaction should be: a. unusual in nature, infrequent, and material in amount. b. unusual in nature and infrequent, but it need not be material. c. infrequent and material in amount, but it need not be unusual in nature. d. unusual in nature and material, but it need not be infrequent.

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

SEE SOLUTION Check out a sample Q&A here

Step 1

VIEW

Step 2

VIEW

Step by step

Solved in 2 steps

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.

Similar questions

Which of the following would not overstate current-period net income?a. Capitalizing an expenditure that should be expensed.b. Failing to record a liability as an expense.c. Failing to record a check paying an item in Vouchers Payable.d. All of the above would overstate net income.
Which of the following accounts would never be reportedin the income statement as an expense?a. Depreciation expense.b. Income taxes expense.c. Interest expense.d. Dividends expense.
unlike depreciation and retained earnings, the interest expense does not have to directly tie on any item on the balance sheet or income statement. True False
Which of the following is not a criterion to recognize revenue under GAAP?A. The earnings process must be completed.B. A product or service must be provided.C. Cash must be collected.D. GAAP requires that the accrual basis accounting principle be used in the revenue recognition process
What is the accounting treatment for discontinued operations? A : It is reported at its gross amount as an "other revenue or gain" or "other expense or loss". B : It is reported as an "other revenue or gain" or "other expense and loss", net of tax. C : It only needs to be disclosed in the footnotes of the financial statements. D : It may be treated as sales revenue (if it is a gain) and as an operating expense (if it is a loss).
Which of the following statements is not correct regarding combined statement of financial position errors and income statement errors? a. It does not affect net income. b. It results to misstatement of the statement of financial position. c. It can be classified as counterbalancing errors and non-counterbalancing errors. d. It affects both real and nominal accounts.
With respect to the concept of materiality, which of the following statements is correct?a. Materiality depends only on the dollar amount of an item relative to other items in the financial statements.b. Materiality depends on the nature of a transaction rather than the dollar amount of the transaction.c. Materiality is determined by reference to AICPA guidelines.d. Materiality is a matter of professional judgment.
True or false The income or loss reflected in the Income Statement is the result of the application of accrual method of accounting.
The concept of materiality: a Treats as material only those items that are greater than 2% or 3% of net income. b Justifies ignoring the matching principle in certain circumstances. c Affects only items reported in the income statement. d Results in financial statements that are less useful to decision makers because many details have been omitted.
What are three limitations of the income statement thatoften lead to misconceptions?
Which of the following statements is most likely to be correct? Bad debts recovered account, if having an income tax benefit, is transferred to profit or loss summary account. A trial balance establishes the arithmetical accuracy of the accounting records. A well-maintained asset need not be depreciated. Drawing of goods by the owner should be debited to profit or loss summary account.
Which is incorrect concerning the presentation of Income Statement? A. When items of income and expense are material, their nature and amount shall be disclosed separately. B. An entity shall present extraordinary items separately on the face of the income statement or in the notes to F/S. C. Natural presentation means that expenses are aggregated according to their nature like depreciation and employee benefits. D. Cost of sales method classifies expenses according to their function such as cost of sales, cost of distribution and cost of administrative activities. E. Both the natural presentation and functional presentation has their own merits for different types of entities, so the standard allows management to choose which they think is more relevant and reliable presentation.