Final answer:
Extraordinary losses should indeed be reported net of insurance proceeds to accurately show the financial impact after insurance recovery. This is true according to standard accounting practices.
Step-by-step explanation:
The statement that extraordinary losses should be reported net of insurance proceeds related to the extraordinary losses is true. When an extraordinary loss occurs, the company may receive insurance proceeds as compensation. According to accounting principles, the net effect on financial statements should reflect the loss amount reduced by any insurance recoveries. This ensures the financial statements present a clear picture of the financial impact of the loss on the company after considering the mitigating effect of insurance.