Multiple Choice
Which of the following is NOT included in continuing operations when preparing a company's statement of comprehensive income?
4. Merchandising Operations
Comprehensive Income
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Which of the following is NOT included in a statement of comprehensive income?
A
Foreign currency translation adjustments
B
Dividends paid to shareholders
C
Unrealized gains and losses on available-for-sale securities
D
Unrealized gains and losses on cash flow hedges
Verified step by step guidance1
Understand the purpose of a statement of comprehensive income: It reports all changes in equity during a period except those resulting from investments by owners and distributions to owners (e.g., dividends).
Review the components typically included in comprehensive income: These include items such as foreign currency translation adjustments, unrealized gains and losses on available-for-sale securities, and unrealized gains and losses on cash flow hedges.
Identify the item that does not fit: Dividends paid to shareholders are distributions to owners and are not part of comprehensive income. Instead, they are reported in the statement of changes in equity.
Clarify the distinction: Comprehensive income focuses on non-owner changes in equity, while dividends are owner-related transactions and are excluded from this statement.
Conclude the analysis: The correct answer is 'Dividends paid to shareholders,' as it is not included in the statement of comprehensive income.
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