Which of the Following Statements About Nonrecurring and Other Special

question 109

Multiple Choice

Which of the following statements about nonrecurring and other special items is correct?

• A)Some special items,such as changes in the value of certain balance sheet accounts,are excluded from the calculation of net income.
• B)Nonrecurring items such as discontinued operations are presented above the income tax expense line on the income statement.
• C)Discontinued operations are reported net of tax as part of the income from continuing operations.
• D)Interest Expense is shown net of tax as part of Other Comprehensive Income.

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Definitions:

Net Sales

Revenue from the sale of goods or services after the deduction of returns, allowances for damaged or missing goods, and discounts.

P/E Ratio

Stands for Price-to-Earnings Ratio, which measures a company's current share price relative to its per-share earnings, often used to gauge valuation.

Dividend Discount Model

A method of valuing a company's stock price based on the theory that its stock is worth the sum of all of its future dividend payments, discounted back to their present value.

Financial Statements

Papers that offer a summary of a company's financial status, encompassing the balance sheet, income statement, and cash flow statement.