Components of Income

a. For each of the following, indicate whether the item would be classified as an operating revenue, operating expense, gain or loss, nonoperating income, nonoperating expense, or not included in the computation of net income:

. Sale of products to other divisions within the company.

. Sale of products to parties outside the company.

. Cost of goods sold.

Income taxes.

. Labor costs.

. Pension costs.

The amount received in excess of the carrying amount of land that is sold.

. Interest income from temporary investments.
. The cost of reorganizing a struggling company.

b. Indicate which of the items above you would consider important in developing a forecast of a company’s future net income and cash flows. If you are not sure if a component should be included, indicate the reason for your uncertainty.