Section 1: 30–40%1A2
Income Statement / Statement of Profit or Loss
The income statement is the performance report investors rely on most. The FAR exam tests proper classification of revenues, expenses, and especially the treatment of discontinued operations — one of the most frequently tested topics in this area.
What AICPA Wants You to Know
- 1Distinguish between single-step and multi-step income statement formats
- 2Calculate and present gross profit, operating income, and income from continuing operations
- 3Apply the discontinued operations rules: what qualifies, where it's reported, and how it's measured
- 4Know that extraordinary items no longer exist under US GAAP (eliminated by ASU 2015-01)
- 5Describe earnings per share (EPS) requirements and where EPS appears on the face of the I/S
- 6Identify which unusual or infrequent items are reported within continuing operations