Exam 4: Income Statement and Related Information

A strength of the income statement as compared to the statement of financial position is that items that cannot be measured reliably can be reported in the income statement.

A company recognizes a change in estimate by making a retrospective adjustment to the financial statements.

When a company discontinues an operation and disposes of the discontinued operation (component), the transaction should be included in the income statement as a gain or loss on disposal reported as

A change in accounting principle requires what kind of adjustment to the financial statements?

Comprehensive income includes all changes in equity during a period except those resulting from distributions to owners.

In which section of the income statement is interest expense reported?

The non-controlling interest section of the income statement is shown

Companies only restrict retained earnings to comply with contractual requirements or current necessity.

Watts Corporation made a very large arithmetical error in the preparation of its year-end financial statements by improper placement of a decimal point in the calculation of depreciation.The error caused the net income to be reported at almost double the proper amount.Correction of the error when discovered in the next year should be treated as

Investors and creditors use income statement information for each of the following Except to

Which of the following is not a generally practiced method of presenting the income statement?

The transaction approach of income measurement focuses on the income-related activities that have occurred during the period.

Which of the following items will not appear in the retained earnings statement?

Discontinued operations and gains and losses are both reported net of tax in the income statement.

Which of the following is included in comprehensive income?

Which of the following does not appear on a statement of retained earnings?

Income before income taxes is computed by deducting interest expense from income from operations.

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

Both revenues and gains increase both net income and equity.