All Items of Income and Expense That Arise During a Financial

question 2

True/False

All items of income and expense that arise during a financial period must be included in profit or loss.
e.g.changes in a revaluation surplus.These items are not included in the determination of the profit or loss that arose during a financial period.Instead,the balance of equity is directly adjusted.

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Definitions:

Inventories

Assets held for sale in the ordinary course of business, in the process of production for such sale, or in the form of materials or supplies to be consumed in the production process or in the rendering of services.

Insurance Policy

A contract between an insurer and a policyholder that outlines the terms and conditions under which the insurer agrees to compensate the policyholder for losses under specified circumstances.

Retained Earnings

Profits that a company has earned to date, less any dividends or other distributions paid to the shareholders, often reinvested in the business or used to pay off debt.

Cost of Goods Sold

The specific costs incurred from the production of goods a business sells, including labor and materials.