Unformatted text preview: continuing operations. The multiple-step format reports a series (multiple) of intermediate totals such as gross profit, operating income, and income before taxes. Very often income statements adopt variations of these formats, falling somewhere in between the two extremes. Question 4-5 The term earnings quality refers to the ability of reported earnings (income) to predict a company’s future earnings. After all, an income statement simply reports on events that already have occurred. The relevance of any historical-based financial statement hinges on its predictive value. Question 4-6 Restructuring costs include costs associated with shutdown or relocation of facilities or downsizing of operations. They are reported as an operating expense in the income statement. Chapter 4 The Income Statement and Statement of Cash Flows QUESTIONS FOR REVIEW OF KEY TOPICS...
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- Spring '10
- Income Statement, Generally Accepted Accounting Principles