Discuss the current operating performance concept of income and the all-inclusive concept of
income. Is comprehensive income consistent with either of the two? Discuss why or why not.
Solution
Current operating performance concept of income - Under this concept net income should
include only regular, recurring and predictable earnings from normal operations and from current
period and exclude irregular earnings and losses ,extraordinary items and other items such as
changes in accounting principle should be closed directly to retained earnings
All-inclusive concept of income - under this concept net income should include any gain or loss,
whether related to operations or not.It includes all items related to net increase and net decrease
of shareholders\' equity during the period with exception of capital transaction.
Comprehensive Income statement is consistent with both the current operating performance
concept of income and the all-inclusive concept of income.
Comprehensive Income statement uses the term comprehensive income to describe the total of
all components of comprehensive income, including net income. Other comprehensive income
refers to revenues, gains, and losses that under generally accepted accounting principles are
included in comprehensive income but excluded from net income..
Discuss the current operating performance concept of income and the .pdf
1. Discuss the current operating performance concept of income and the all-inclusive concept of
income. Is comprehensive income consistent with either of the two? Discuss why or why not.
Solution
Current operating performance concept of income - Under this concept net income should
include only regular, recurring and predictable earnings from normal operations and from current
period and exclude irregular earnings and losses ,extraordinary items and other items such as
changes in accounting principle should be closed directly to retained earnings
All-inclusive concept of income - under this concept net income should include any gain or loss,
whether related to operations or not.It includes all items related to net increase and net decrease
of shareholders' equity during the period with exception of capital transaction.
Comprehensive Income statement is consistent with both the current operating performance
concept of income and the all-inclusive concept of income.
Comprehensive Income statement uses the term comprehensive income to describe the total of
all components of comprehensive income, including net income. Other comprehensive income
refers to revenues, gains, and losses that under generally accepted accounting principles are
included in comprehensive income but excluded from net income.
