In classifying the elements of financial statements, the primary distinction between revenues and gains is
A) the materiality of the amounts involved.
B) the likelihood that the transactions involved will recur in the future.
C) the nature of the activities that gave rise to the transactions involved.
D) the costs versus the benefits of the alternative methods of disclosing the transactions involved.

Question

Quizplus · Accepted Answer

The primary distinction between revenues and gains is the nature of the activities that gave rise to the transactions involved. Revenues are the result of the usual course of business activities, such as the sale of goods or services. Gains, on the other hand, result from transactions that are not part of the usual course of business activities, such as the sale of a long-term asset or an investment. Materiality, likelihood of recurrence, and the costs versus benefits of disclosure are not the primary factors in distinguishing between revenues and gains.

In Classifying the Elements of Financial Statements, the Primary Distinction