Final answer:
Income from discontinued operations, extraordinary items, and changes in accounting principles are indeed reported net of tax, providing stakeholders with a clearer understanding of their net effect on a company's financials.
Step-by-step explanation:
The statement that income from discontinued operations, extraordinary items, and the cumulative effect of change in accounting principles are all shown net of tax is true. When companies report these items in their financial statements, they typically present them after accounting for their tax impact. This acquiesces to the general principle that investors and other stakeholders should understand the net effect of these items on the company's financial position, which includes the tax consequences associated with them. The effective tax rate, which is used to account for these items, takes into consideration tax benefits included in a current tax year and varies by jurisdiction. Therefore, to accurately reflect the financial outcome, these items are shown after the effects of taxation.