When a Corporation Discontinues a Segment of Its Operations at a Loss

question 138

True/False

When a corporation discontinues a segment of its operations at a loss, the loss should be reported as a separate item before income from continuing operations on the income statement.

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Definitions:

Closing the Books

Closing the books is an accounting process involving updating ledger accounts at the end of an accounting period to prepare financial statements.

Fiscal Year

A twelve-month period used for accounting purposes to prepare financial statements, which may or may not align with the calendar year.

Calendar Year

A one-year period that begins on January 1 and ends on December 31, used for most financial and tax reporting purposes.

Financial Statements

Formal records of the financial activities and position of a business, person, or other entity, typically including a balance sheet, income statement, and cash flow statement.