ACCA Financial Reporting (F7) Practice Exam 2025 – Complete Prep Guide

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How is comprehensive income different from net income?

Comprehensive income includes only cash transactions

Comprehensive income includes all non-owner changes in equity

Comprehensive income is a broader measure of an entity's financial performance than net income. The key distinction lies in the components that each term encompasses.

Comprehensive income includes not only net income but also all non-owner changes in equity that result from transactions and other events that are not owner-related. This includes unrealized gains and losses on investments, foreign currency translation adjustments, and pension liability adjustments, among others. These items can significantly impact the overall financial position and performance of an entity, but they are not included in the net income calculation, which focuses primarily on revenues and expenses recognized during a specific period.

This understanding of comprehensive income highlights its importance in providing a complete picture of an organization’s financial performance, moving beyond the operating aspects to reflect all influences on equity that are not directly tied to transactions with owners.

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Net income includes only operating activities

Comprehensive income is calculated annually only

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