Question

Which item is not correct with respect to the treatment of sustainable and transitory items and a company's income statement?

a. Financial reporting assists statement users in forecasting future cash flows by providing an income statement format that segregates components of net income.
b. Income statements prepared in accordance with GAAP differentiate between income components that are believed to be sustainable and those that are transitory.
c. The income statement isolates a key figure called "income from sustainable operations."
d. Transitory items are disclosed separately on the income statement so that statement users can place less weight on these earnings components when forecasting future profitability.

Answer 1

c. The income statement isolates a key figure called "income from sustainable operations."

Step-by-step explanation:

Remember, an income statement is a financial report document that contains the revenues and expenses of a company in other to determine if the company is making a profit or loss in a particular period.

However, with respect to the treatment of sustainable and transitory items and a company's income statement, it is incorrect to say that the "income statement has an isolated key figure called "income from sustainable operations," because it often notes transitory items and sustainable income components but not isolating them.