Which of the following is false with regard to the element \"comprehensive incom

Question

Which of the following is false with regard to the element "comprehensive income"?

It is more inclusive than the traditional notion of net income.

It includes net income and all other changes in equity exclusive of owners' investments and distributions to owners.

This concept is not yet being applied in practice.

It excludes prior period adjustments (transactions that relate to previous periods, such as corrections of errors).

It is more inclusive than the traditional notion of net income.

It includes net income and all other changes in equity exclusive of owners' investments and distributions to owners.

This concept is not yet being applied in practice.

It excludes prior period adjustments (transactions that relate to previous periods, such as corrections of errors).

Explanation / Answer

The following is false with regard to the element "comprehensive income":

It excludes prior period adjustments (transactions that relate to previous periods, such as corrections of errors).

Comprehensive income is the sum of net income and other items that must bypass the income statement because they have not been realized, including items like an unrealized holding gain or loss from available for sale securities and foreign currency translation gains or losses. But the comprehensive income excludes prior period adjustments.

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