How Should a Material, Infrequent Event Not Meeting the Criteria

question 55

Multiple Choice

How should a material, infrequent event not meeting the criteria for an extraordinary item be disclosed in the income statement?

• A)shown as a separate item in income from continuing operations and supplemented by a footnote if deemed appropriate
• B)shown in income from continuing operations but not shown as a separate item
• C)shown after income from continuing operations but before extraordinary items
• D)shown after extraordinary items net of income tax but before net income

Recognize the importance of liquidity measures such as current, quick, and cash ratios.

Analyze financial statements to compute key financial ratios.

Understand the significance of cash flow activities including operating, investing, and financing activities.

Evaluate company performance and financial health through ratio analysis.

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Definitions:

Financing Activities

Transactions involving long-term liabilities, stockholder's equity, and changes in short-term loans that impact a company's capital structure.

Treasury Stock

Refers to shares that were once part of the outstanding shares and have been bought back by the issuing company.

Interest Payments

Payments made to lenders as compensation for borrowing money, typically calculated as a percentage of the principal amount.

Investing Activities

Transactions involving the purchase and sale of long-term assets and other investments not considered as cash equivalents.