An income statement prepared with separate components
A)enables users to distinguish transactions that are due to operations from those that are not useful as predictors of future performance.
B)is prepared only for income items that are frequent and usual.
C)is used primarily by companies involved with complex financing transactions.
D)may replace a statement of cash flows..

Question

Quizplus · Accepted Answer

An income statement prepared with separate components, such as separating operating and non-operating income or expenses, allows users to better understand the performance of a company's core business operations and filter out transactions that are not useful predictors of future performance. This can provide more meaningful information for decision making compared to a simpler income statement that just presents total revenue and expenses. A separate statement of cash flows is still necessary to understand the cash flow implications of the reported income and expenses.

An Income Statement Prepared with Separate Components