Question:
Which one of the following items is included in the determination of income from continuing operations?
a. Discontinued operations.
b. Extraordinary loss.
c. Cumulative effect of a change in an accounting principle.
d. Unusual loss from a write-down of inventory.
Answer:
1. d. Discontinued operations and extraordinary gains and losses are shown separately in the income
statement, below income from continuing operations. The cumulative effect of most voluntary
changes in accounting principle is accounted for by retrospectively revising prior years’ financial
statements.
Which one of the following items is included in the determination of income from continuing operations?
a. Discontinued operations.
b. Extraordinary loss.
c. Cumulative effect of a change in an accounting principle.
d. Unusual loss from a write-down of inventory.
Answer:
1. d. Discontinued operations and extraordinary gains and losses are shown separately in the income
statement, below income from continuing operations. The cumulative effect of most voluntary
changes in accounting principle is accounted for by retrospectively revising prior years’ financial
statements.
