Identify all false statements from the list below.

1. Gross profit is more relevant for predicting future cash flows than gain on sales of assets which may be used to smooth income.

2. Unrealized gains & losses and gain/loss from discontinued operations are least relevant for predicting future cash flows.

3. Impairment charge is more relevant for predicting future cash flows than restructuring costs.

4. Discontinued operation represents strategic shift that involve disposals of major business component(s), and must be reported before income tax expense.

5. You will see "Income from continuing operations" in statement of operations of all real-world companies.

Group of answer choices

3, 4, 5

3 & 5

2, 3, 4

1, 2, 3

Which is not true?

Group of answer choices

Prior-period adjustment involves correction of prior-period errors against retained earnings.

An auditor should scrutinize whether a firm shifted gains into the operating section and shifted losses into the nonoperating section of a statement of earnings.

Net income is a better predictor of future cash flows than operating income especially when a company has discontinued operations.

Single-step income statement does not have gross profit and operating income.

Access http://www2.aaahq.org/ascLogin.cfm(Links to an external site.) to identify the Accounting Standard Codification sub-topic number that tells you how to report amounts received to settle lawsuits in the statement of cash flows. (User ID: AAA51248, Password: cE7Z8zC)

Group of answer choices

230-10-45-12: Report as cash flows from investing activities.

230-10-45-14: Report as cash flows from financing activities.

230-10-45-16: Report as cash flows from operating activities.

230-10-45-2: : Report as a reconciliation of net income.