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NEW QUESTION: 1
A transaction that is unusual in nature and infrequent in occurrence should be reported separately as a
component of income:
A. Before cumulative effect of accounting changes and before discontinued operations of a segment of a
B. After cumulative effect of accounting changes and after discontinued operations of a segment of a
C. After cumulative effect of accounting changes and before discontinued operations of a segment of a
D. After discontinued operations of a segment of a business.
Choice "d" is correct. An extraordinary item (a transaction that is both "unusual in nature" and "infrequent
in occurrence") should be reported separately as a component of income after discontinued operations of
a segment of a business.
The cumulative effect of a change in accounting principle is shown on the retained earnings statement.
This is why memorizing the mnemonic "idea" is so important.
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