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Unformatted text preview: COMPREHENSIVE INCOME Most revenues, expenses, gains, and losses are included in net income. However, certain gains and losses bypass net income. Instead, companies record these items as direct adjustments to stockholders' equity. Many analysts have expressed concern about this practice because they believe it reduces the usefulness of the income statement. To address this concern, the FASB requires companies to report not only net income, but also comprehensive income. Comprehensive income includes all changes in stockholders' equity during a period except those changes resulting from investments by stockholders and distributions to stockholders. Illustration of Comprehensive Income Accounting standards require that companies adjust most investments in stocks and bonds up or down to their market value at the end of each accounting period. For example, assume that during 2010 to their market value at the end of each accounting period....
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This note was uploaded on 11/08/2011 for the course ACCOUNTING ac 201 taught by Professor - during the Spring '11 term at Montgomery.
- Spring '11