Reporting Unusual Items Separately on the Income Statement Allows Investors

question 143

True/False

Reporting unusual items separately on the income statement allows investors to isolate the effects of these items on income and cash flows.

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Definitions:

Depreciation Expense

Depreciation Expense represents the systematic allocation of the cost of a tangible asset over its useful life, reflecting its wear and tear or obsolescence.

Contra-Asset

A contra-asset account is an asset account where the balance of the account is either zero or a credit balance, used to reduce the value of the related asset, such as accumulated depreciation for fixed assets.

Accumulated Depreciation

The total amount of a company's asset that has been expensed for depreciation to date.

Accrued Expense

An expense that has been incurred but has not yet been paid or recorded in financial statements through standard accounting entries.