Asked by Sergei Glukhov on May 09, 2024
Verified
Income statements prepared in accordance with GAAP differentiate between income components that are believed to be sustainable and those that are transitory.
GAAP
Generally Accepted Accounting Principles are a standardized collection of accounting norms, standards, and methods that organizations are required to adhere to when preparing their financial reports.
Income Statements
A financial statement that shows a company's revenues and expenses over a specific period, resulting in net profit or loss.
- Recognize key events that influence the timing of recognizing net income and differentiate between operating and non-operating income.
- Grasp the requirements for recording extraordinary transactions, discontinued business segments, and unique items following GAAP and IFRS.
Verified Answer
SD
Sydney DaughertyMay 10, 2024
Final Answer :
True
Explanation :
This statement is true. Income statements prepared in accordance with GAAP (Generally Accepted Accounting Principles) do differentiate between income components that are believed to be sustainable (such as recurring revenue from ongoing business operations) and those that are transitory (such as gains or losses from one-time events or non-recurring items). This helps users of financial statements understand the underlying profitability and cash flow of the business.
Learning Objectives
- Recognize key events that influence the timing of recognizing net income and differentiate between operating and non-operating income.
- Grasp the requirements for recording extraordinary transactions, discontinued business segments, and unique items following GAAP and IFRS.