If an Item Meets One (But Not Both) of the Criteria

question 169

Multiple Choice

If an item meets one (but not both) of the criteria for an extraordinary item, it

• A)only needs to be disclosed in the footnotes of the financial statements.
• B)may be treated as sales revenue (if it is a gain) and as an operating expense (if it is a loss).
• C)is reported as an "other revenue or gain" or "other expense and loss," net of tax.
• D)is reported at its gross amount as an "other revenue or gain" or "other expense or loss."

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Definitions:

Personal Creditors

Individuals or entities to whom a person owes money, as opposed to business or corporate creditors.

Journal Entry

A journal entry is a record of a financial transaction in an accounting system, ensuring that debits and credits are recorded in the correct accounts.

Partnership Asset

Assets owned jointly by partners in a partnership, used in the operation of the partnership business.

Liquidation

The process of closing a business, selling its assets, and using the proceeds to pay creditors and shareholders.