Exam 5: The Income Statement and the Statement of Cash Flows Time Value of Money Module

Examples of matching expenses against revenues using the association of cause and effect include all of the following except

Baxter, Inc., reported income from continuing operations before taxes) of $55,000. In addition, there was a $15,000 loss pretax) on the sale of a discontinued component of the business. Taxes of $16,500 30%) were paid. Required: Prepare the bottom portion of the income statement.

A company does not have to disclose information about the sale of a discontinued component in the notes to its financial statements until the actual sale has occurred.

Which ratios are the most commonly analyzed from the income statement?

Companies with lower coverage ratios have a greater risk and a lower financial flexibility.

Which of the following is not used as a caption if there is nothing to report?

The following are accounting items taken from the records of Sterling Company for 2016: Required: Prepare the statement of cash flows for Sterling Company for 2016 using the indirect method.

The most common way in which to prepare the statement of cash flows is the indirect method, which is encouraged by FASB.

Who is the income statement designed to inform?

In the preparation of interim income statements, the expenses are recognized differently depending on whether or not they are directly related to product sales or services. Required: Discuss the general treatment of expenses in interim statements when they a. are directly related to product sales or services. b. are not directly related to product sales or services.

Information from the accounts of Gause Company is shown below: The merchandise inventory on January 1, 2016, was $3,200,000. There were 250,000 shares of common stock outstanding during the entire year. Required: Assuming a 30% income tax rate, prepare a 2016 income statement for Gause Company. Use a multiple-step format.

When an entity reports on a sale of a component of the business

Tiger Corporation presents the following condensed comparative income statement for Required: Prepare the rate of change analysis for Tiger 2016 and 2017.

Which of the following is included in comprehensive income?

Revenue can be recognized either when it is earned, collection has occurred, or collection is reasonably certain to occur.

What three tests are used to evaluate an operating segment in order to determine if it is a reportable segment?

An operating segment is a reportable segment if it

Comprehensive income is an important concept in accounting because it represents

The SEC reported that overstating revenue and recognizing revenue too soon was the culprit in more than half of the financial reporting frauds in the United States. As such Staff Accounting Bulletin No. 104 provided additional guidance on revenue recognition. It emphasized four criteria for revenue recognition. What are these criteria?

Which of the following is not part of other comprehensive income?