Reporting results of operations - Special income statement sections

12 important questions on Reporting results of operations - Special income statement sections

Two reasons to put a special section on the income statement

Discontinued operations or Irregular items

What item would often appear under discontinued operations?

Gain or loss on sale of assets associated with operations.

Three examples of irregular items

Natural disaster losses, restructuring charges, losses from civil unrest
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What makes EPS exceptionally important?

It is required on the income statement for a publicly traded corporation.

What is a special consideration affecting EPS?

If preferred stock is convertible, the company should calculate the diluted earnings per share to disclose to shareholders.

What are three requirements for the payment of a cash dividend?

Retained earnings (usually a positive net income is going to be required by a company for a dividend)
Cash to pay the dividend
Action by the Board of Directors

What is a date of record?

The date when a shareholder must be listed in company records to receive a declared dividend

How is a stock dividend different from a stock split?

It is smaller, and does not necessarily impact market value.

How is a stock dividend journalized?

Debit Retained Earnings, credit Stock Dividend to be Distributed and Paid-in Capital

What is a prior period adjustment for?

To correct an error from a previous, already-issued statement

A company may have _____ on their Retained Earnings due to certain contracts.  This is _____________.

Restrictions, disclosed in the notes

What is comprehensive income?

A total that takes account of changes in value of assets that are not realized, so not part of regular net income.

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