Which of the following is an argument supporting the "current operating" income recognition school of thought?
A)Most financial statement users look only to bottom-line net income to assess current performance and to make predictions regarding subsequent years' performance.
B)Under this approach, management makes the decision on whether or not an item is extraordinary and therefore excluded from the income statement.
C)The summation of all income displayed on the income statement for a period of years should reflect the reporting entity's net income for that period.
D)Proper classification within the income statement allows both normal recurring items and unusual, infrequently occurring items to be displayed separately within the same statement.

Question

Quizplus · Accepted Answer

This argument suggests that users of financial statements focus primarily on bottom-line net income to assess a company's current performance and future prospects. Therefore, recognizing income based on current operating activities provides a more accurate representation of a company's ongoing operations and financial health.

Which of the Following Is an Argument Supporting the "Current