- CFA Exams
- CFA Exam: Level I 2021
- Study Session 7. Financial Reporting and Analysis (2)
- Reading 21. Understanding Income Statements
- Subject 6. Non-Recurring Items and Non-Operating Items
CFA Practice Question
Which of the following items would not be included in net income or loss for a period?
B. Prior period adjustments
C. Extraordinary items
D. Discontinued operations
A. Cumulative effect of accounting changes
B. Prior period adjustments
C. Extraordinary items
D. Discontinued operations
Correct Answer: B
The cumulative effects of accounting changes are reported on the income statement after extraordinary items. Prior period adjustments are related to earlier accounting periods and are not reported on the current year's income statement.
User Contributed Comments 3
| User | Comment |
|---|---|
| oneashok | can anyone please explain about prior period adjustments? |
| oneashok | Got it! Prior period adjustments are usualy accounted in a later period... right? |
| johntan1979 | Nope. They are already accounted for and not adjusted for again in the current year's statement. |