Question 1

The income statement provides investors and creditors with information to predict all of the following except the:

Accepted Answer

A)  amount of future cash flows. 
B)  sources of future cash flows. 
C)  timing of future cash flows. 
D)  uncertainty of future cash flows. 
A)  amount of future cash flows. 
B)  sources of future cash flows. 
C)  timing of future cash flows. 
D)  uncertainty of future cash flows.

Question 2

Leonard Corporation reports the following information:Correction of overstatement of depreciation expense   Leonard should report retained earnings, 1/1/14, as adjusted at

Accepted Answer

A)  $3,570,000. 
B)  $4,000,000. 
C)  $4,430,000. 
D)  $5,110,000. 
A)  $3,570,000. 
B)  $4,000,000. 
C)  $4,430,000. 
D)  $5,110,000.

Question 3

Which of the following is included in comprehensive income?

Accepted Answer

A)  Investments by owners. 
B)  Unrealized gains on available-for-sale securities. 
C)  Distributions to owners. 
D)  Changes in accounting principles. 
A)  Investments by owners. 
B)  Unrealized gains on available-for-sale securities. 
C)  Distributions to owners. 
D)  Changes in accounting principles.

Question 4

Listed below in scrambled order are 13 income statement categories. Use the numerals 1 through 13 to indicate the order in which these categories should appear on a multiple-step income statement.
( ) Discontinued operations.
( ) Cost of goods sold.
( ) Other revenues and gains.
( ) Net income.
( ) Income taxes.
( ) Sales revenue.
( ) Gross profit on sales.
( ) Income from operations.
( ) Income from continuing operations before income taxes.
( ) Operating expenses.
( ) Extraordinary item.
( ) Income before extraordinary items.
( ) Income from continuing operations.

Accepted Answer

10, 2, 6,

Question 5

Which of the following would represent the least likely use of an income statement prepared for a business enterprise?

Accepted Answer

A)  Use by customers to determine a company's ability to provide needed goods and services. 
B)  Use by labor unions to examine earnings closely as a basis for salary discussions. 
C)  Use by government agencies to formulate tax and economic policy. 
D)  Use by investors interested in the financial position of the entity. 
A)  Use by customers to determine a company's ability to provide needed goods and services. 
B)  Use by labor unions to examine earnings closely as a basis for salary discussions. 
C)  Use by government agencies to formulate tax and economic policy. 
D)  Use by investors interested in the financial position of the entity.

Question 6

A correction of an error in prior periods' income will be reported

Accepted Answer

The answer of A correction of an error in prior...

Question 7

A company that reports a discontinued operation or an extraordinary item must report per share amounts for these items.

Accepted Answer

A) True 
 B)False

Question 8

Ortiz Co. had the following account balances:   What would Ortiz report as total expenses in a single-step income statement?

Accepted Answer

A)  $210,500 
B)  $221,000 
C)  $204,500 
D)  $ 94,500 
A)  $210,500 
B)  $221,000 
C)  $204,500 
D)  $ 94,500

Question 9

A material item which is unusual in nature or infrequent in occurrence, but not both should be shown in the income statement

Accepted Answer

The answer of A material item which is unusual in...

Question 10

If plant assets of a manufacturing company are sold at a gain of $1,500,000 less related taxes of $450,000, and the gain is not considered unusual or infrequent, the income statement for the period would disclose these effects as

Accepted Answer

A)  a gain of $1,500,000 and an increase in income tax expense of $450,000. 
B)  operating income net of applicable taxes, $1,050,000. 
C)  a prior period adjustment net of applicable taxes, $1,050,000. 
D)  an extraordinary item net of applicable taxes, $1,050,000. 
A)  a gain of $1,500,000 and an increase in income tax expense of $450,000. 
B)  operating income net of applicable taxes, $1,050,000. 
C)  a prior period adjustment net of applicable taxes, $1,050,000. 
D)  an extraordinary item net of applicable taxes, $1,050,000.

Question 11

An income statement shows "income before income taxes and extraordinary items" in the amount of $3,425,000. The income taxes payable for the year are $1,800,000, including $600,000 that is applicable to an extraordinary gain. Thus, the "income before extraordinary items" is

Accepted Answer

A)  $2,225,000. 
B)  $1,025,000. 
C)  $2,325,000. 
D)  $1,125,000. 
A)  $2,225,000. 
B)  $1,025,000. 
C)  $2,325,000. 
D)  $1,125,000.

Question 12

The accounting profession has adopted a current operating performance approach to income reporting.

Accepted Answer

A) True 
 B)False

Question 13

IFRS allows for revaluation of long-term tangible and intangible assets with the differencesimpacting equity but not net income.

Accepted Answer

A) True 
 B)False

Question 14

In 2014, Benfer Corporation reported net income of $210,000. It declared and paid common stock dividends of $24,000 and had a weighted average of 70,000 common shares outstanding. Compute the earnings per share to the nearest cent.

Accepted Answer

A)  $2.66 
B)  $2.10 
C)  $2.70 
D)  $3.00 
A)  $2.66 
B)  $2.10 
C)  $2.70 
D)  $3.00

Question 15

Discontinued operations of a component of a business are classified as a separate item in the income statement:

Accepted Answer

A)  after "income from continuing operations". 
B)  before "income from continuing operations". 
C)  between income from operations and income before income tax. 
D)  immediately after "gross profit". 
A)  after "income from continuing operations". 
B)  before "income from continuing operations". 
C)  between income from operations and income before income tax. 
D)  immediately after "gross profit".

Question 16

Terminology.In the space provided, write the word or phrase that is defined or indicated.

Accepted Answer

1. Earnings per share.
2. Comp

Question 17

In calculating earnings per share, companies deduct preferred dividends from net income if:

Accepted Answer

A)  they are noncumulative though not declared. 
B)  the dividends are declared. 
C)  they are convertible preferred shares. 
D)  they are callable preferred shares. 
A)  they are noncumulative though not declared. 
B)  the dividends are declared. 
C)  they are convertible preferred shares. 
D)  they are callable preferred shares.

Question 18

Which of the following items would be reported at its gross amount on the face of the income statement?

Accepted Answer

A)  Extraordinary loss 
B)  Prior period adjustment 
C)  Cumulative effect of a change in an accounting principle 
D)  Unusual gain 
A)  Extraordinary loss 
B)  Prior period adjustment 
C)  Cumulative effect of a change in an accounting principle 
D)  Unusual gain

Question 19

Which of the following is an example of managing earnings down?

Accepted Answer

A)  Changing estimated bad debts from 3 percent to 2.5 percent of sales. 
B)  Revising the estimated life of equipment from 10 years to 8 years. 
C)  Not writing off obsolete inventory. 
D)  Reducing research and development expenditures. 
A)  Changing estimated bad debts from 3 percent to 2.5 percent of sales. 
B)  Revising the estimated life of equipment from 10 years to 8 years. 
C)  Not writing off obsolete inventory. 
D)  Reducing research and development expenditures.

Question 20

Companies report the results of operations of a component of a business that will be disposed of separately from continuing operations.

Accepted Answer

A) True 
 B)False

Exam 4: Income Statement and Related Information

The income statement provides investors and creditors with information to predict all of the following except the:

Leonard Corporation reports the following information:Correction of overstatement of depreciation expense Leonard should report retained earnings, 1/1/14, as adjusted at

Which of the following is included in comprehensive income?

Which of the following would represent the least likely use of an income statement prepared for a business enterprise?

A correction of an error in prior periods' income will be reported

A company that reports a discontinued operation or an extraordinary item must report per share amounts for these items.

Ortiz Co. had the following account balances: What would Ortiz report as total expenses in a single-step income statement?

A material item which is unusual in nature or infrequent in occurrence, but not both should be shown in the income statement

If plant assets of a manufacturing company are sold at a gain of $1,500,000 less related taxes of $450,000, and the gain is not considered unusual or infrequent, the income statement for the period would disclose these effects as

An income statement shows "income before income taxes and extraordinary items" in the amount of $3,425,000. The income taxes payable for the year are $1,800,000, including $600,000 that is applicable to an extraordinary gain. Thus, the "income before extraordinary items" is

The accounting profession has adopted a current operating performance approach to income reporting.

IFRS allows for revaluation of long-term tangible and intangible assets with the differencesimpacting equity but not net income.

In 2014, Benfer Corporation reported net income of $210,000. It declared and paid common stock dividends of $24,000 and had a weighted average of 70,000 common shares outstanding. Compute the earnings per share to the nearest cent.

Discontinued operations of a component of a business are classified as a separate item in the income statement:

Terminology.In the space provided, write the word or phrase that is defined or indicated.

In calculating earnings per share, companies deduct preferred dividends from net income if:

Which of the following items would be reported at its gross amount on the face of the income statement?

Which of the following is an example of managing earnings down?

Companies report the results of operations of a component of a business that will be disposed of separately from continuing operations.

Financial Accounting and Accounting Standards

Conceptual Framework for Financial Reporting

The Accounting Information System

Balance Sheet and Statement of Cash Flows

Accounting and the Time Value of Money

Cash and Receivables

Valuation of Inventories: a Cost-Basis Approach

Inventories: Additional Valuation Issues

Acquisition and Disposition of Property, Plant, and Equipment

Depreciation, Impairments, and Depletion

Intangible Assets

Current Liabilities and Contingencies

Long-Term Liabilities

Stockholders Equity

Dilutive Securities and Earnings Per Share

Investments

Revenue Recognition

Accounting for Income Taxes

Accounting for Pensions and Postretirement Benefits

Accounting for Leases

Accounting Changes and Error Analysis

Statement of Cash Flows

Full Disclosure in Financial Reporting

Appendix

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