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31 an example of an item likely to be extraordinary for most firms is a loss from an 4297735



31. An example of an item likely to be extraordinary for most firms is a loss from an earthquake or confiscation of assets by a foreign government. 

32. U.S. GAAP and IFRS require firms to disclose unrealized gains and losses that historically have bypassed the income statement in a category called other comprehensive income. 

33. U.S. GAAP and IFRS require firms to account for correction of errors, regardless of whether they are material or not, by retrospectively restating net income of prior periods and adjusting the beginning balance in Retained Earnings for the current period. 

34. U.S. GAAP and IFRS require firms to retrospectively apply any changes in accounting principle by recalculating the income for prior periods under the new accounting principle, if it at all feasible. 

35. Accrual accounting requires frequent, ongoing changes in estimates. 

36. Publicly held firms that apply U.S. GAAP or IFRS must show earnings per common share data in the body of the income statement. 

37. Investors often apply multiples to earnings per common share and book value per common share in deciding on a reasonable market price for a firm’s shares. 

38. The annual reports to shareholders must explain the changes in all shareholders’ equity accounts. 

39. Comprehensive income equals net income as reported on the income statement plus (minus) the increase (decrease) in other comprehensive income for the year. 

40. All corporations issue  
A. common stock.
B. preferred stock.
C. treasury stock.
D. convertible stock.
E. putable stock.



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