Question 1

What items should be included in comprehensive income but not in net income?

Accepted Answer

A) net income 
B) foreign currency translations 
C) unrealized gains on investments 
D) all of the above should be included 
A) net income 
B) foreign currency translations 
C) unrealized gains on investments 
D) all of the above should be included D

Question 2

The effect of a switch from Average Costing to FIFO would affect which section of the income statement:

Accepted Answer

A) Cost of Goods Sold 
B) Net of Tax Adjustment 
C) Comprehensive Income 
D) cumulative accounting adjustments 
A) Cost of Goods Sold 
B) Net of Tax Adjustment 
C) Comprehensive Income 
D) cumulative accounting adjustments A

Question 3

During prior periods the Rocket Company used the double-declining balance method for depreciating its equipment,but in 2010 it decided to switch to the straight-line method.
The equipment was purchased in 2008 for $1,000,000 and had a 10 year life.The
Balance in the accumulated depreciation account for equipment at the beginning of 2010
Was $360,000.How will 2010's net income be changed by switching to the new
Depreciation if Rocket has an effective tax rate of 40%.

Accepted Answer

A) $ 60,000 smaller 
B) $16,800 larger 
C) $28,000 larger 
D) $40,000 smaller 
A) $ 60,000 smaller 
B) $16,800 larger 
C) $28,000 larger 
D) $40,000 smaller B

Question 4

Macroteledyne,Inc.'s income from continuing operations before taxes was $2,000,000 for the year ended December 31,2010.The company's effective tax rate is 40% and during the year the following events also took place:
The company sold one of its divisions at a gain of $250,000.The division had an operating loss of $185,000 through the date of disposal.
A flood destroyed a warehouse owned by the company.The amount of the uninsured loss was $375,000.This was the first flood ever in this area.
Required: Prepare the lower portion of the income statement,from "income from continuing operations before taxes" through "net income",for the year ended 12/31/10.

Accepted Answer

The answer of Macroteledyne,Inc.'s income from continuing operations before taxes...

Question 5

Bob Inc.has gross profit equal to $1,000,000.During the year Bob Inc.purchased $300,000 worth of inventory.The sales recorded during the year equaled $1,500,000.What is the value of Bob Inc.'s cost of goods sold?

Accepted Answer

A) no answer possible 
B) $ 300,000 
C) $ 500,000 
D) $ 800,000 
E) $ 1,800,000 
A) no answer possible 
B) $ 300,000 
C) $ 500,000 
D) $ 800,000 
E) $ 1,800,000

Question 6

How can full-absorption costing hurt a company?

Accepted Answer

A) business leaders might spread variable costs over more inventory 
B) material costs might be expensed too quickly 
C) fixed costs might be spread over more inventory 
D) fixed costs might change to variable costs 
A) business leaders might spread variable costs over more inventory 
B) material costs might be expensed too quickly 
C) fixed costs might be spread over more inventory 
D) fixed costs might change to variable costs

Question 7

What item would not be part of the cost of inventory under the variable costing method?

Accepted Answer

A) depreciation on the manufacturing building 
B) direct materials 
C) direct labor 
D) all of the above would be included in the variable cost of inventory 
A) depreciation on the manufacturing building 
B) direct materials 
C) direct labor 
D) all of the above would be included in the variable cost of inventory

Question 8

Advance Systems,Inc.had 840,000 shares of common stock outstanding on January 1,2010,and repurchased 75,000 shares on June 1,2010.Net income for the year ended December 31,2010,was $2,662,625,and preferred stock dividends for the year amounted to $35,000.The earnings per share for 2010 were:

Accepted Answer

A) $3.30 
B) $3.34 
C) $3.48 
D) $3.53 
A) $3.30 
B) $3.34 
C) $3.48 
D) $3.53

Question 9

Speed Inc.reported a net income equal to $15,000.The dividends declared & paid to the preferred shareholders equaled $ 5,000 and paid the common stockholders a dividend of $8,000.Speed Inc.had 10,000 shares outstanding all year long.What value is Speed Inc.'s earnings per share?

Accepted Answer

A) $ .50 
B) $ 1.00 
C) $ 1.50 
D) $ .20 
A) $ .50 
B) $ 1.00 
C) $ 1.50 
D) $ .20

Question 10

In calculating earnings per share,the numerator is:

Accepted Answer

A) income from continuing operations 
B) net income plus common dividends 
C) net income minus preferred dividends 
D) income before taxes plus preferred dividends 
A) income from continuing operations 
B) net income plus common dividends 
C) net income minus preferred dividends 
D) income before taxes plus preferred dividends

Question 11

Use the following to answer questions
James Company had the following income statement for the year ended December 31, 2010:
  
-The firm's income before income tax for 2008 was:

Accepted Answer

A) $200,000 
B) $120,000 
C) $115,000 
D) unable to determine from the information given 
A) $200,000 
B) $120,000 
C) $115,000 
D) unable to determine from the information given

Question 12

A loss on the sale of equipment would be included in which element of net income:

Accepted Answer

A) operating income 
B) prior period adjustments 
C) nonoperating section 
D) net of tax item 
A) operating income 
B) prior period adjustments 
C) nonoperating section 
D) net of tax item

Question 13

What is compromised when a firm changes from one accepted accounting method to another?

Accepted Answer

A) matching 
B) objectivity 
C) conservatism 
D) consistency 
A) matching 
B) objectivity 
C) conservatism 
D) consistency

Question 14

Under unit-variable costing,

Accepted Answer

A) companies can increase income by increasing the number of units produced 
B) all product and period costs are included in cost of goods sold 
C) only costs that vary per unit are included in cost of goods sold 
D) only direct material costs are included in cost of goods sold 
A) companies can increase income by increasing the number of units produced 
B) all product and period costs are included in cost of goods sold 
C) only costs that vary per unit are included in cost of goods sold 
D) only direct material costs are included in cost of goods sold

Question 15

Jackson,Inc.had 360,000 shares of common stock outstanding on January 1,2010 and issued 60,000 additional shares on July 1,2010.There was no preferred stock.If net income for the year ended December 31,2010 was $1,072,500,the earnings per share were:

Accepted Answer

A) $2.23 
B) $2.55 
C) $2.75 
D) $2.98 
A) $2.23 
B) $2.55 
C) $2.75 
D) $2.98

Question 16

Use the following to answer questions 
Kaiser Corporation sold its Telecommunications Division during 2010. The company's accountants determined that the division earned $850,000 of pre-tax income during 2008 prior to disposal. The sale resulted in a $370,000 loss before taxes. Kaiser's income from continuing operations for 2008 amounted to $4,138,000. The company's effective tax rate is 35%.
-The amount of income from operations of the Telecommunications Division that would appear on the 2010 income statement of Kaiser Corporation is:

Accepted Answer

A) $297,500 
B) $312,000 
C) $552,500 
D) $850,000 
A) $297,500 
B) $312,000 
C) $552,500 
D) $850,000

Question 17

River Inc.had an extraordinary gain equal to $ 15,000 (before taxes).The net income for River Inc.equals $ 48,000.What was the value of "income from continuing operations?"

Accepted Answer

A) $ 48,000 
B) $ 36,000 
C) $ 60,000 
D) no answer can be determined 
A) $ 48,000 
B) $ 36,000 
C) $ 60,000 
D) no answer can be determined

Question 18

Use the following to answer questions
James Company had the following income statement for the year ended December 31, 2010:
  
-The firm's net income for 2010 was:

Accepted Answer

A) $110,000 
B) $102,000 
C) $ 80,000 
D) unable to determine from the information given 
A) $110,000 
B) $102,000 
C) $ 80,000 
D) unable to determine from the information given

Question 19

Match between columns
                        Premises: Net Income
Discontinued Operations
Extraordinary Items
Comprehensive Income
Earnings per Share

Accepted Answer

The Answer of Reports all changes in owners' equity (excludes is...

Question 20

Assume a company has no dilutive securities.What number will be greater?

Accepted Answer

A) basic earnings per share 
B) diluted earnings per share 
C) question cannot be answered 
D) A & B should be the same 
A) basic earnings per share 
B) diluted earnings per share 
C) question cannot be answered 
D) A & B should be the same

What items should be included in comprehensive income but not in net income?

The effect of a switch from Average Costing to FIFO would affect which section of the income statement:

Bob Inc.has gross profit equal to $1,000,000.During the year Bob Inc.purchased $300,000 worth of inventory.The sales recorded during the year equaled $1,500,000.What is the value of Bob Inc.'s cost of goods sold?

How can full-absorption costing hurt a company?

What item would not be part of the cost of inventory under the variable costing method?

Advance Systems,Inc.had 840,000 shares of common stock outstanding on January 1,2010,and repurchased 75,000 shares on June 1,2010.Net income for the year ended December 31,2010,was $2,662,625,and preferred stock dividends for the year amounted to $35,000.The earnings per share for 2010 were:

Speed Inc.reported a net income equal to $15,000.The dividends declared & paid to the preferred shareholders equaled $ 5,000 and paid the common stockholders a dividend of $8,000.Speed Inc.had 10,000 shares outstanding all year long.What value is Speed Inc.'s earnings per share?

In calculating earnings per share,the numerator is:

Use the following to answer questions James Company had the following income statement for the year ended December 31, 2010: -The firm's income before income tax for 2008 was:

A loss on the sale of equipment would be included in which element of net income:

What is compromised when a firm changes from one accepted accounting method to another?

Under unit-variable costing,

Jackson,Inc.had 360,000 shares of common stock outstanding on January 1,2010 and issued 60,000 additional shares on July 1,2010.There was no preferred stock.If net income for the year ended December 31,2010 was $1,072,500,the earnings per share were:

River Inc.had an extraordinary gain equal to $ 15,000 (before taxes).The net income for River Inc.equals $ 48,000.What was the value of "income from continuing operations?"

Use the following to answer questions James Company had the following income statement for the year ended December 31, 2010: -The firm's net income for 2010 was:

Assume a company has no dilutive securities.What number will be greater?

Accounting and Business

Business Processes and Accounting Information

Operating Processes: Planning and Control

Short-Term Decision Making

Strategic Planning Regarding Operating Processes

Planning, The Balanced Scorecard, and Budgeting

Accounting Information Systems

Purchasinghuman Resourcespayment Process: Recording and Evaluating Expenditure Process Activities

Recording and Evaluating Conversion Process Activities

Recording and Evaluating Revenue Process Activities

Time Value of Money

Planning Investments: Capital Budgeting

Planning Equity Financing

Planning Debt Financing

Recording and Evaluating Capital Resource Process Activities: Financing

Recording and Evaluating Capital Resource Process Activities: Investing

Company Performance: Owners Equity and Financial Position

Company Performance: Cash Flows

Company Performance: Comprehensive Evaluation

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Exam 17: Company Performance: Profitability

What items should be included in comprehensive income but not in net income?

The effect of a switch from Average Costing to FIFO would affect which section of the income statement:

Bob Inc.has gross profit equal to $1,000,000.During the year Bob Inc.purchased $300,000 worth of inventory.The sales recorded during the year equaled $1,500,000.What is the value of Bob Inc.'s cost of goods sold?

How can full-absorption costing hurt a company?

What item would not be part of the cost of inventory under the variable costing method?

Advance Systems,Inc.had 840,000 shares of common stock outstanding on January 1,2010,and repurchased 75,000 shares on June 1,2010.Net income for the year ended December 31,2010,was $2,662,625,and preferred stock dividends for the year amounted to $35,000.The earnings per share for 2010 were:

Speed Inc.reported a net income equal to $15,000.The dividends declared & paid to the preferred shareholders equaled $ 5,000 and paid the common stockholders a dividend of $8,000.Speed Inc.had 10,000 shares outstanding all year long.What value is Speed Inc.'s earnings per share?

In calculating earnings per share,the numerator is:

Use the following to answer questions James Company had the following income statement for the year ended December 31, 2010: -The firm's income before income tax for 2008 was:

A loss on the sale of equipment would be included in which element of net income:

What is compromised when a firm changes from one accepted accounting method to another?

Under unit-variable costing,

Jackson,Inc.had 360,000 shares of common stock outstanding on January 1,2010 and issued 60,000 additional shares on July 1,2010.There was no preferred stock.If net income for the year ended December 31,2010 was $1,072,500,the earnings per share were:

River Inc.had an extraordinary gain equal to $ 15,000 (before taxes).The net income for River Inc.equals $ 48,000.What was the value of "income from continuing operations?"

Use the following to answer questions James Company had the following income statement for the year ended December 31, 2010: -The firm's net income for 2010 was:

Assume a company has no dilutive securities.What number will be greater?

Accounting and Business

Business Processes and Accounting Information

Operating Processes: Planning and Control

Short-Term Decision Making

Strategic Planning Regarding Operating Processes

Planning, The Balanced Scorecard, and Budgeting

Accounting Information Systems

Purchasinghuman Resourcespayment Process: Recording and Evaluating Expenditure Process Activities

Recording and Evaluating Conversion Process Activities

Recording and Evaluating Revenue Process Activities

Time Value of Money

Planning Investments: Capital Budgeting

Planning Equity Financing

Planning Debt Financing

Recording and Evaluating Capital Resource Process Activities: Financing

Recording and Evaluating Capital Resource Process Activities: Investing

Company Performance: Owners Equity and Financial Position

Company Performance: Cash Flows

Company Performance: Comprehensive Evaluation

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