The underlying premise of the clean surplus accounting is that all profit and loss elements go through income.

Question

Quizplus · Accepted Answer

Clean surplus accounting states that all changes in equity, including gains and losses from investments or other comprehensive income, are recognized directly in a special section of the income statement called "Other Comprehensive Income" and flow into equity in the clean surplus approach, without affecting net income. So, the statement that all profit and loss elements go through income is true under clean surplus accounting.

The Underlying Premise of the Clean Surplus Accounting Is That