Which one of the following types of losses is excluded from the determination of net income in income statements?
A) Material losses resulting from transactions in the company's investments account.
B) Material losses resulting from unusual sales of assets not acquired for resale.
C) Material losses resulting from the write-off of intangibles.
D) Material losses resulting from correction of errors related to prior periods.

Question

Quizplus · Accepted Answer

Material losses resulting from correction of errors related to prior periods are excluded from the determination of net income in income statements because they are treated as prior period adjustments, not as part of the current period's income or expenses. These adjustments are directly applied to retained earnings rather than affecting the current period's net income.

Which One of the Following Types of Losses Is Excluded