Income statements prepared in accordance with GAAP differentiate between income components that are believed to be sustainable and those that are transitory.

Question

Quizplus · Accepted Answer

This statement is true. Income statements prepared in accordance with GAAP (Generally Accepted Accounting Principles) do differentiate between income components that are believed to be sustainable (such as recurring revenue from ongoing business operations) and those that are transitory (such as gains or losses from one-time events or non-recurring items). This helps users of financial statements understand the underlying profitability and cash flow of the business.

Income Statements Prepared in Accordance with GAAP Differentiate Between Income