AICPA Exam CPA-Financial Topic 3 Question 113 Discussion

Actual exam question for AICPA's CPA-Financial exam

Question #: 113
Topic #: 3

A transaction that is unusual in nature and infrequent in occurrence should be reported separately as a component of income:

AAfter cumulative effect of accounting changes and before discontinued operations of a segment of a business.

BAfter cumulative effect of accounting changes and after discontinued operations of a segment of a business.

CBefore cumulative effect of accounting changes and before discontinued operations of a segment of a business.

DAfter discontinued operations of a segment of a business.

Show Suggested Answer

Suggested Answer: D

Choice 'd' is correct. An extraordinary item (a transaction that is both 'unusual in nature' and 'infrequent in occurrence') should be reported separately as a component of income after discontinued operations of a segment of a business.

The cumulative effect of a change in accounting principle is shown on the retained earnings statement.

This is why memorizing the mnemonic 'idea' is so important.

by Odelia at Jul 10, 2025, 03:59 AM

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