Segregating a company's recurring operating income from nonrecurring income sources is useful because
A) recurring income is constantly changing.
B) nonrecurring income is subject to greater management bias and uncertainty.
C) results from continuing operations have greater significance for predicting future performance.
D) nonrecurring income is irrelevant to stakeholders.

Question

Quizplus · Accepted Answer

Segregating a company's recurring operating income from nonrecurring income sources is useful because results from continuing operations have greater significance for predicting future performance. Nonrecurring income is not expected to persist in future periods and is, therefore, less relevant for assessing the company's future performance. Recurring income, on the other hand, is expected to continue in future periods and is, therefore, a more reliable indicator of a company's future prospects.

Segregating a Company's Recurring Operating Income from Nonrecurring Income Sources