Section 1: 30–40%1A2

Income Statement / Statement of Profit or Loss

Exam insight

Two income statement topics come up over and over: discontinued operations and comprehensive income. A frequent slip is forgetting the 'strategic shift' requirement, since not every disposal is a discontinued operation. Watch the OCI items too: unrealized gains on AFS securities and pension adjustments run through OCI, not net income. Mix those up and you give away easy points.

What AICPA wants you to know

1Distinguish between single-step and multi-step income statement formats
2Calculate and present gross profit, operating income, and income from continuing operations
3Apply the discontinued operations rules: what qualifies, where it's reported, and how it's measured
4Know that extraordinary items no longer exist under US GAAP (eliminated by ASU 2015-01)
5Describe earnings per share (EPS) requirements and where EPS appears on the face of the I/S
6Identify which unusual or infrequent items are reported within continuing operations

Patterns in this topic

The exam re-skins the same archetypes. Recognize these here, then drill them in the Pattern Lab.

The Classification CallWhere an item sits is a bright-line rules test: bucket it first, then compute anything.The EPS EngineBasic is income minus preferred dividends over weighted shares; diluted adds each security only if it dilutes, most dilutive first.

Exam tip

Study smarter: before you expand each card, cover the screen and try to recall what the concept means from its title alone. Retrieving it from memory builds the recall the exam actually tests, and it beats re-reading.