Gains and losses that bypass net income but affect stockholders' equity are referred to as:
A) Comprehensive income
B) Other comprehensive income
C) Prior period income
D) Unusual gains and losses

Question

Quizplus · Accepted Answer

Other comprehensive income refers to gains and losses that bypass net income but affect stockholders' equity, such as unrealized gains and losses on available-for-sale securities, foreign currency translation adjustments, and certain pension adjustments. Comprehensive income includes net income and other comprehensive income. Choice A (Comprehensive income) is incorrect as it also includes net income. Choices C and D refer to specific types of items that may affect net income but not all gains and losses that bypass net income.

Gains and Losses That Bypass Net Income but Affect Stockholders