A Transaction That Is Material in Amount, Unusual in Nature

question 10

Multiple Choice

A transaction that is material in amount, unusual in nature, but not infrequent in occurrence should be presented separately as a (an)

• A) Component of income from continuing operations, but not net of applicable income taxes
• B) Component of income from continuing operations, net of applicable income taxes
• C) Extraordinary item, net of applicable income taxes
• D) Prior period adjustment, but not net of applicable income taxes

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Definitions:

Par Value

The nominal or face value of a bond, share of stock, or other financial instrument, as stated by the issuing company.

Net Income

The amount of profit left after all operating expenses, interest, taxes, and dividends have been deducted from total revenue.

Dividend Payout Ratio

The dividend payout ratio is the fraction of net income a firm pays to its stockholders in dividends, expressed as a percentage, showing the percentage of earnings distributed as dividends.

Market Price

This represents the price at which a commodity, security, or other financial instrument is traded on the open market and can be purchased or sold.