Extraordinary items:

Question

Quizplus · Accepted Answer

Extraordinary items are defined as items that are both unusual in nature and occur infrequently, according to Generally Accepted Accounting Principles (GAAP). They are shown on the income statement after the tax effect. Choice A is incorrect because very large gains or losses from ordinary business activities are not necessarily considered extraordinary items. Choice C is incorrect because extraordinary items are shown after the tax effect, not before. Choice D is also incorrect because the write-down of obsolete inventories is not necessarily an extraordinary item, as it could be considered a regular part of business operations.

Extraordinary Items