CFA Level I · CFA Level I Exam · Analyzing Income Statements
Accumulated other comprehensive income on the balance sheet is most likely:
Accumulated other comprehensive income is a component of shareholders' equity that holds the cumulative OCI items recognized to date. It is not a liability and is not reset annually, because balances change only through new OCI, reclassification, or transfers within equity.
- Aa liability representing future tax on unrealized gains
- Ba component of equity holding the cumulative OCI items recognized to dateCorrect
- Ca component of retained earnings reset to zero at each year end
Explanation
OCI items accumulate in a separate component of equity, often called accumulated OCI or a reserve. It is not a liability and is not closed to zero annually like income statement accounts; it is reduced only by reclassification or transfers within equity.
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