When does an item show up on the income statement?
A) The revenue or expense recognized or incurred in the period listed on the statement.
B) When the cash is transferred from one party to another.
C) Earnings to equity investors are affected.
D) When cash is expected to be transferred from one party to another.
Answer: A and C
Explanation: In order to affect the income statement, the transaction must impact the bottom-line, what we are solving for, which is net income to common stockholders. Second, the transaction must align with the period defined in the statement.
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