Which item is not correct with respect to the treatment of sustainable and transitory items and a company's income statement?Financial reporting assists statement users in forecasting future cash flows by providing an income statement format that segregates components of net income. Income statements prepared in accordance with GAAP differentiate between income components that are believed to be sustainable and those that are transitory. The income statement isolates a key figure called “income from sustainable operations.” Transitory items are disclosed separately on the income statement so that statement users can place less weight on these earnings components when forecasting future profitability.

The income statement represents the net income or net loss calculated by deducting the expenses from…

Answered: Which item is not correct with respect…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Which item is not correct with respect to the treatment of sustainable and transitory items and a company's income statement?

Financial reporting assists statement users in forecasting future cash flows by providing an income statement format that segregates components of net income.
Income statements prepared in accordance with GAAP differentiate between income components that are believed to be sustainable and those that are transitory.
The income statement isolates a key figure called “income from sustainable operations.”
Transitory items are disclosed separately on the income statement so that statement users can place less weight on these earnings components when forecasting future profitability.

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