Gains and Losses

It would probably be ideal if business and life were as simple as producing goods , selling and record profits. But there are often circumstances that disrupt the cycle , and is part of the work of accountants to report these as well . Changes in the business climate, or the cost of goods or any number of things can lead to gains and losses in exceptional or extraordinary company . Some things that can alter the income statement can include reducing or restructuring of the company. This used to be a rare thing in the business, but it is now quite common . It is usually done to offset losses in other areas and reduce the cost of salaries and benefits of employees. However, there are costs associated with that too, as severance , placement services and pension costs .
In other circumstances , a company may decide to discontinue certain product lines. Western Union , for example, recently delivered its last telegram . The nature of communication has changed so drastically , with email , cell phones and other forms , that telegrams have become obsolete. When not enough of a product with a high enough sale so that manufacturing costs valid , then it is time to change your product benefit.
Lawsuits and other legal actions may also cause losses or extraordinary gains . If you win damages in a lawsuit against the other , then you have incurred an extraordinary gain . Similarly, if their own legal fees and damages or fines are excessive , then these can significantly affect the bottom line .
Sometimes a company will change accounting methods or need to correct the mistakes that were made in previous financial reports. Generally accepted accounting procedures (GAAP ) require that businesses make any loss of time or very noticeable gains in their income tax return.