WSP Exam Prep – Workplace Safety & Professional Standards – study
material
Nonrecurring items (unusual or infrequent) - correct answer ✔✔-there are certain income and
expenses that FASB (financial accounting standards board) feels should be excluded from
earnings and therefore require companies to embed within the income statement, but that
analysts do frequently want to remove from the income statement results to hone in on core
operating profitability.
-these items include:
1. restructuring expenses
2. one time write offs
3. gains/losses on sale of assets
4. severance costs
5. litigation gains/losses
Which one of these are generally NOT considered to be a pre-tax non-recurring (unusual or
infrequent) item?
-restructuring expenses
-one-time write offs
-extraordinary gains/losses
-gains/losses on sale of assets - correct answer ✔✔-extraordinary gains/losses
Amortization - correct answer ✔✔-this non-cash expense is sometimes (but not always) ignored
by analysts when analyzing earnings, meaning reported GAAP-based results are adjusted by
analysts to exclude the impact of amortization. When amortization is ignored, EPS is called
"cash EPS"
-the logic of removing amortization is similar to the logic of removing SBC in the sense that both
are non-cash expenses
material
Nonrecurring items (unusual or infrequent) - correct answer ✔✔-there are certain income and
expenses that FASB (financial accounting standards board) feels should be excluded from
earnings and therefore require companies to embed within the income statement, but that
analysts do frequently want to remove from the income statement results to hone in on core
operating profitability.
-these items include:
1. restructuring expenses
2. one time write offs
3. gains/losses on sale of assets
4. severance costs
5. litigation gains/losses
Which one of these are generally NOT considered to be a pre-tax non-recurring (unusual or
infrequent) item?
-restructuring expenses
-one-time write offs
-extraordinary gains/losses
-gains/losses on sale of assets - correct answer ✔✔-extraordinary gains/losses
Amortization - correct answer ✔✔-this non-cash expense is sometimes (but not always) ignored
by analysts when analyzing earnings, meaning reported GAAP-based results are adjusted by
analysts to exclude the impact of amortization. When amortization is ignored, EPS is called
"cash EPS"
-the logic of removing amortization is similar to the logic of removing SBC in the sense that both
are non-cash expenses
