(L.O. 5) Which of the following is false with regard to the concept “comprehensive income”?

a. It is more inclusive than the traditional notion of net income.

b. It includes net income and all other changes in equity exclusive of owners’ investments and distributions to owners.

c. It is an “element” in the FASB’s conceptual framework.

d. It excludes prior period adjustments (transactions that relate to previous periods, such as corrections of errors).

Explanation: Comprehensive income includes all changes in equity during a period except those resulting from investments by owners and distributions to owners. Prior period adjustments (such as corrections of errors) are included under comprehensive income; they are excluded from the concept of net income (as it is currently applied in practice). (Solution = d.)