Question

Which of the following items are included in a company's income from continuing operations?

1) Extraordinary items
2) Interest expense
3) Unusual and nonrecurring gains and losses

Answer 1

The items included in a company's income from continuing operations are interest expense and unusual and nonrecurring gains and losses. Extraordinary items are not included.

Step-by-step explanation:

The items included in a company's income from continuing operations are:

1. Interest expense: This refers to the cost of borrowing money, such as interest paid on loans or bonds.
2. Unusual and nonrecurring gains and losses: These are gains or losses that are not expected to happen regularly or are not part of the company's normal operations. Examples include the sale of a subsidiary or a major lawsuit settlement.

However, extraordinary items are not included in a company's income from continuing operations. Extraordinary items are events or transactions that are both unusual in nature and infrequent in occurrence, such as a natural disaster or expropriation of assets.