Question

An item not typically reported in the income from continuing operations section of an income statement is:

Multiple Choice

• Interest on long term debt.

• Sales returns and allowances.

• Discontinued activity for an operating segment.

• Cost of goods sold.

Answer 1

· Correct Answer = Option #3: Discontinued activity for an operating segment WILL NOT BE typically reported in the income from continuing operating section of Income Statement, because it involves ‘discontinued’ operations.

· Other options:
Interest on Long term debt, will be reported under “other expenses”
Sales return & allowances will be shown as deduction to calculate Net sales.
Cost of Goods Sold will be deducted from Net sales to find the Gross Profits.