CFA Practice Question

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CFA Practice Question

Non-operating items include all of the following except ______.

I. a gain from the sale of a segment of a company
II. uninsured losses from a fire
III. changing from one accounting method to another
Correct Answer: None of these statements is true.

Non-operating items are items that are not related to the normal operations of a company. These include discontinued operations (a gain from the sale of a segment of a company) as well as unusual or infrequent items items (uninsured losses from a fire), and changes in accounting methods.

User Contributed Comments 9

User Comment
RCapistrano What is not a nonoperating item?

Not + non- (double negatives)= positive (i.e., what is an operating item?) -- leads to choice "None of these".
cleopatraliao I thought those things r non-recurring items but not non-occuring items...
ColonelCFA The double negative in the question is tricky
johntan1979 DEA
gill15 So non-operating items are Investing and Financing activities which includes IDEA?
johntan1979 DEA
Shaan23 Sale of a segment - A - Thats not discontinuted operations

Sale of a segment is Unusual or Infrequent. Answer should be except i)
Gains and losses arising when a company sells and asset OR part of a business ---> Unusual or infrequent.
What am I missing?
Kevdharr Think I-D-E-A.

I is considered an operating item and its gain or loss is included in PRE-TAX income (above the line:

D-E-A- are considered non-operating items so the gain or loss that they result in are included AFTER TAX (below the line)

Cost of good sold
Blah blah blah
I- unusual of infrequent events
Pre-tax income
D- Discontinued operations
E- Extraordinary events
A- Accounting changes:
After tax income

I think that's right at least ha
choas69 Revenues
Gross Profit
Operating Expenses
Operating Profit
Unusual OR Infrequent items
Financing Costs
Pre Tax Income
Income Taxes
Net Income from continuing operations
Discontinued operations
Extra Ordinary items
Changes in accounting principles
Net Income
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