Extraordinary items ______

I. are unusual in nature.
II. occur infrequently.
III. are reported separately from operating activities on an income statement.

Correct Answer: I, II and III

Extraordinary items are events or transactions that are unusual in nature and infrequent in occurrence. When these items are material, they should be reported separately from operating activities on the income statement.

GAAP rules were changed in January 2015, and the concept of extraordinary items was eliminated in an effort to reduce the cost and complexity of preparing financial statements. It is still necessary for companies to disclose infrequent and unusual events (such as losses from theft or early retirement of debt), but now without designating them as extraordinary.