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ACCT 301
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Chapter 8 when we previously discussed the structure of the profit and loss account as regards to the continuing, discontinued operations and new acquisitions, the format we drew up ended with ‘Profit on ordinary Activities Before Interest.’ We will now continue from there. Profit on ordinary activities before interest X Interest Payable (X) Profit on ordinary activities before taxation X Tax on profit on ordinary Activities (X) Profit on ordinary activities after taxation X Well, what should strike you whilst taking a look at the previous profit and loss account statements is the use of ‘ordinary activities’. The reason simply being is that if there exists a profit on ordinary activities, there may be profits or losses on ‘not so ordinary activities’. But are there? Well FRS 3 states that there are two types of ‘out of the ordinary items’, which are: A) Exceptional Items B) Extraordinary Items Basically Exceptional items are those items that occur during the ordinary course of the business but need to be disclosed due to their size or incidence. E.g. a main customer goes ban
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