Under US GAAP, Companies Must Provide a Description of the Changes

question 43

Multiple Choice

Under US GAAP, companies must provide a description of the changes in comprehensive income as either a separate statement or as a part of the statement of changes in stockholders' equity. Under IFRS, companies must also provide a description of the changes in comprehensive income in a:

• A) Statement of Recognized Income and Expense
• B) Statement of Unrecognized Income and Expense
• C) Statement of Retained Earnings
• D) Income Statement

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Definitions:

Sequential Method

A process or analytical approach where steps are followed in a specific, sequential order to achieve a desired result or solution.

Direct Method

A way of preparing a cash flow statement where actual cash receipts and payments are reported, rather than adjusting net income for accruals.

Reciprocal Method

An accounting technique used in managerial accounting to allocate costs between support departments, taking into account the mutual services they provide to each other.

Sequential Method

An approach to cost allocation in which support department costs are allocated to other support and operating departments sequentially, one after another, based on a predetermined order.