Table of contents

1. Introduction to Accounting1h 21m
2. Transaction Analysis1h 13m
3. Accrual Accounting Concepts2h 38m
4. Merchandising Operations2h 30m
5. Inventory1h 55m
6. Internal Controls and Reporting Cash1h 16m
7. Receivables and Investments3h 8m
8. Long Lived Assets5h 1m
9. Current Liabilities2h 19m
10. Time Value of Money1h 23m
- Time Value of Money Equations
  35m
- Using Time Value of Money Tables
  47m
11. Long Term Liabilities2h 45m
12. Stockholders' Equity2h 15m
13. Statement of Cash Flows2h 24m
14. Financial Statement Analysis5h 25m
15. GAAP vs IFRS56m

4. Merchandising Operations

Comprehensive Income

Financial Accounting

4. Merchandising Operations

Comprehensive Income

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Multiple Choice

Comprehensive income includes all of the following except:

Unrealized gains and losses on available-for-sale securities

Foreign currency translation adjustments

Unrealized gains and losses on cash flow hedges

Dividends declared to shareholders

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Verified step by step guidance

Step 1: Understand the concept of comprehensive income. Comprehensive income includes all changes in equity during a period except those resulting from investments by owners and distributions to owners. This means it includes items that are not part of net income but affect equity.

Step 2: Review the components of comprehensive income. Common components include unrealized gains and losses on available-for-sale securities, foreign currency translation adjustments, and unrealized gains and losses on cash flow hedges. These items are reported in other comprehensive income (OCI).

Step 3: Analyze the exception provided in the problem. Dividends declared to shareholders are distributions to owners and are not part of comprehensive income. Instead, they are a direct reduction in retained earnings.

Step 4: Compare dividends to the other items listed. Unlike unrealized gains/losses and foreign currency adjustments, dividends do not represent changes in equity due to external market factors or financial instruments. They are a direct transaction with shareholders.

Step 5: Conclude that dividends declared to shareholders are excluded from comprehensive income because they are distributions to owners, not changes in equity due to external factors or financial performance.