Which of the following statements regarding nonrecurring and other special items is true?
A) Some special items, such as changes in the value of certain balance sheet accounts, are excluded from the calculation of net income.
B) Nonrecurring items such as discontinued operations are presented above the income tax expense line on the income statement.
C) Discontinued Operations are reported net of tax as part of the income from continuing operations.
D) Cumulative effect of change in accounting principles is reported on the income statement as part of income from continuing operations.

Question

Quizplus · Accepted Answer

Nonrecurring and other special items are usually excluded from the calculation of net income, but some special items such as changes in the value of certain balance sheet accounts may also be excluded from the calculation of net income. Option B is incorrect because nonrecurring items such as discontinued operations are presented below the income tax expense line on the income statement. Option C is incorrect because Discontinued Operations are reported net of tax after the income from continuing operations, and option D is incorrect because Cumulative effect of change in accounting principles is reported on the income statement separately as a line item above the income tax expense line.

Which of the Following Statements Regarding Nonrecurring and Other Special