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True or False - Adjustments that are made for Non-Reoccurring events have impacts to both the Income Statement and the Balance Sheet
True or False
- Adjustments that are made for Non-Reoccurring events have impacts to both the Income Statement and the Balance Sheet.
- Examples of Non-Reoccurring events include tax adjustments, reduction in head-count, goodwill impairments and external auditor expenses.
- If a firm has no Non-Reoccurring events over the past business cycle, then there are no adjustments required on the financial statements to conduct financial analysis.
- Scrubbing or sanitizing Non-Reoccurring items is accomplished by adding back or eliminating one time charges.
- The Business Profile of a firm contains important information such as the Business Sector, Products and Services, Geographic Area of operation and Customers.
Expert Solution
1. True: Adjustments that are made for Non-Reoccurring events have impacts to both the Income Statement and the Balance Sheet.
2. False: In the cited examples there are recurring items. for example external auditor expenses is a recurring item.
3. False: There can be different adjustments like "analyst adjustments related to investment".
4. True; Scrubbing or sanitizing Non-Reoccurring items is accomplished by adding back or eliminating one time charges.
5. True : The Business Profile of a firm contains important information such as the Business Sector, Products and Services, Geographic Area of operation and Customers.
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