Question

Describe the effects of extraordinary items on: a. company resources b. management evaluation

Describe the effects of extraordinary items on:

a. company resources

b. management evaluation

Homework Answers

Answer #1

The effects of extraordinary items on

  1. Company Resources : The effects of extraordinary items on the company’s resources is almost NIL because the extra-ordinary occurs one-time and do not repeat in future and the company do not plan for these items so the resources do not have any effect.
  2. Management Evaluation : The management is getting evaluated on the overall basis and do not discriminate between the source of earnings, so the extra-ordinary items do not have any effect on management evaluation. However, the happening of extra-ordinary items is inexplainable so evaluating the management and management would not able to explore any benefits out of these items.
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