Management might,in a "down" earnings year,be tempted to treat nonrecurring gains as part of income from continuing operations and nonrecurring losses as extraordinary.

Question

Quizplus · Accepted Answer

Management may be tempted to classify nonrecurring gains as part of income from continuing operations to make the financial results appear better than they actually are. Similarly, they may classify nonrecurring losses as extraordinary to minimize the impact on the overall financial performance. However, such actions are not in compliance with generally accepted accounting principles and can mislead investors and stakeholders.

Management Might,in a "Down" Earnings Year,be Tempted to Treat Nonrecurring