Which of the Following Statements About the Recognition of a Prior

question 37

Multiple Choice

Which of the following statements about the recognition of a prior service cost related to a postretirement obligation is correct?

• A) The prior service amount is recognized in the income statement in the current period.
• B) The prior service cost is recognized in the income statement net of tax.
• C) Restatement of previously issued annual financial statements is required.
• D) The prior service cost amount affects comprehensive income in the current period.

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Definitions:

Generates Revenue

The process or activities that result in income being brought into a company, such as sales of goods or provision of services.

Incurs Costs

To incur costs means to recognize or accumulate expenses through activities or operations, leading to a reduction in profits.

Dollar Gross Profit

The total monetary gain computed by subtracting the cost of goods sold from the sales revenue of a company.

Net Sales

Gross sales less sales returns and allowances less sales discounts.