Question

Lim Corporation is preparing its financial statements and has given the project to its new entry-level accountant, Sam. Indicate whether each of the following statements made by Sam is True or False.

1. The gain or loss from discontinued operations is placed in a separate category under other income or loss.	True                        False
2. The gain or loss from extraordinary items are disclosed on the income statement after discontinued operations.	True                        False
3. Exit and disposal activities are classified as discontinued operations.	True                        False
4. A component of a company can be classified as discontinued in the first period that it meets the criteria as being held for sale.	True                        False
5. A correction of an error is included in the cumulative effect of change in accounting principle on the income statement.	True                        False
6. Other comprehensive income may be presented at the bottom of the income statement.	True                        False
7. Separate earnings per share amounts must be presented for both other comprehensive income and comprehensive income.	True                        False
8. Prospective financial information includes information on the purpose of the statements, assumptions, Tuand significant accounting policies.

Answer 1

1) True
After Income from continuing operations
For example
Income Statement
For the year ended December 31 2021
Income from continuing operations before income taxes T
Income tax expense
Income from continuing operations
Discontinued operation
Income from operations of discontinued component
Income tax expense
Income from discountinued operations
Net Income
ANS 2
True, extraordinary items come after discontinued operations
ans 3
FALSE
Not always if the exit and disposal is realted with discontinued operations than
it is included in it but the activities which do not result in discontinued operations
would be included under income from continued operations
ans 4 True
If in near future it would be sold than it can be included in discontinued operations
ans 5
FALSE
It is adjsuted in retained earning balance
ans 6 Yes
Yes
A statement is attached at the bottom of income statement
ans 7
FALSE
Under comprehensive income