Question 1

Gross Profit must always be shown on the face of a single-step income statement

Accepted Answer

A) True 
 B)False

Question 2

Little uniformity is found on statements of income with respect to classification of bad debt expense,but the circumstances in a given situation may indicate that some particular classification is appropriate.If the credit and collection function is under the sales department,bad debt expense should be classified as a:

Accepted Answer

A) administrative expense. 
B) financial expense. 
C) selling expense. 
D) manufacturing expense. 
A) administrative expense. 
B) financial expense. 
C) selling expense. 
D) manufacturing expense.

Question 3

An income statement showing depreciation expense a line item is showing its expenses by nature.

Accepted Answer

A) True 
 B)False

Question 4

Maston Inc.,decided to dispose of its telephone manufacturing segment on March 1,Year 1 for $200,000 (book value of net assets,$150,000).The disposal date is June 1,Year 2.Income of the segment for the first two months of Year 1 was $33,000; and for the remainder of Year 1,$107,000.Estimated income for Year 2 to the disposal date is $64,000.Ignoring taxes,calculate the income or loss from discontinued operations and any gain or loss from the disposal of discontinued operations on the income statement of Maston Inc.,for the year ended December 31,Year 1.

Accepted Answer

The answer of Maston Inc.,decided to dispose of its telephone...

Question 5

Economic income excludes accounting income.

Accepted Answer

A) True 
 B)False

Question 6

When reporting net income for a fiscal year,companies must use a 12-month period.

Accepted Answer

A) True 
 B)False

Question 7

Under IFRS,The statement of comprehensive income includes net income and other comprehensive income.

Accepted Answer

A) True 
 B)False

Question 8

Under IFRS,to qualify as a discontinued operation or disposal group,the proceeds of a sale must:

Accepted Answer

A) be recovered through a sale transaction. 
B) be recovered through continuing use. 
C) be recovered through a sale transaction or through continuing use. 
D) be made in cash. 
A) be recovered through a sale transaction. 
B) be recovered through continuing use. 
C) be recovered through a sale transaction or through continuing use. 
D) be made in cash.

Question 9

A company started business on January 1,2006.At the end of 2006,the accounting records provided the following unadjusted and pre-tax amounts: Sales revenue (cash),$186,000; cost of goods sold,$100,000; expenses (cash),$40,000; accrued wages,$6,000; accrued rent revenue,$2,000; and a 40 percent average income tax rate. What was the net income on accrual basis?

Accepted Answer

A) $22,800 
B) $25,200 
C) $27,600 
D) $30,000 
A) $22,800 
B) $25,200 
C) $27,600 
D) $30,000

Question 10

Other comprehensive income includes only unrealized gains and losses.When a previously unrecognized gain or loss is recognized later,this gain or loss will always be included in the company's net income in the year recognized.

Accepted Answer

A) True 
 B)False

Question 11

During the current period,Canada Revenue Agency assessed a firm a nonrecurring income tax amount (but not a penalty) as a result of a Tax Court case involving a disputed deduction from a prior year (the firm lost the case).This amount should be reported by the firm as a (n):

Accepted Answer

A) Correction of period years' errors. 
B) Extraordinary loss. 
C) Expense or loss of the current period. 
D) Direct adjustment to owner's equity. 
A) Correction of period years' errors. 
B) Extraordinary loss. 
C) Expense or loss of the current period. 
D) Direct adjustment to owner's equity.

Question 12

Turnbull Ltd.decided on January 1,2007 to discontinue its plastic-making division.The division,properly identified as a reportable segment,was sold on June 1,2001.Division assets with a carrying value of $800,000 were sold for $500,000.Operating income from January 1,to May 30,2007 for the division amounted to $125,000.Income taxes are at the rate of 45%.What amount should be reported on Turnbull's income statement for the year ended December 31,2007 under the caption "discontinued operations"?

Accepted Answer

The answer of Turnbull Ltd.decided on January 1,2007 to discontinue...

Question 13

Both extraordinary items and unusual or infrequent items must be reported net of income taxes.

Accepted Answer

A) True 
 B)False

Question 14

Unusual or infrequent items should be reported separately,but not net of income tax,and not as an extraordinary item.

Accepted Answer

A) True 
 B)False

Question 15

Other comprehensive income includes unrealized gains on losses of foreign exchange hedges.

Accepted Answer

A) True 
 B)False

Question 16

In 2012,management of Simolin Company changed from straight-line to double-declining balance depreciation.The total difference in depreciation for all years through 2012 was $54,000 and for 2013 the difference was $6,200.The tax rate is 30%.Calculate the amount by which retained earnings at the start of 2013 should be adjusted.

Accepted Answer

Adjustment to retained earning

Question 17

Under IFRS,any Assets Held for Sale arising from the discontinuation of a business segment must be classified as current.

Accepted Answer

A) True 
 B)False

Question 18

The following data are available for 2001: Correction of prior years' error,(a debit,pre-tax and subject to income tax),$22,000; Net income (after tax),$50,000; Dividends,declared $11,000; and Income tax rate,40 percent.Prepare a retained earnings statement for the year ended December 31,2001.The balance January 1,2001,as previously reported is $108,000

Accepted Answer

The answer of The following data are available for 2001:...

Question 19

When a firm decided to change its method of depreciation from the straight-line method to an accelerated method,in Year 8,it discovered that the effect of the change on total depreciation expense for all years affected was as follows.For all years prior to year 8,the depreciation was $50,000 in total.For year 8 only,the depreciation increased by $11,000. Ignoring taxes,Year 8 income is decreased by what amount,and in what classification,as a result of the accounting change? $$\begin{array} { | r | r | r | } 
\hline & \begin{array} { c } 
\text { Income from } \
\text { continuing operations }
\end{array} & \text { Net income } \
\hline 1 & \$ 11,000 & \$ 0 \
\hline 2 & \$ 11,000 & \$ 11,000 \
\hline 3 & \$ 61,000 & \$ 0 \
\hline 4 & \$ 0 & \$ 51,000 \
\hline
\end{array}$$

Accepted Answer

A) Choice 1 
B) Choice 2 
C) Choice 3 
D) Choice 4 
A) Choice 1 
B) Choice 2 
C) Choice 3 
D) Choice 4

Question 20

The following data are available for 2001 (in 000's):   The income tax rate is 40 percent The balance of retained earnings at December 31,2001,was:

Accepted Answer

A) $59 
B) $49 
C) $79 
D) $83 
A) $59 
B) $49 
C) $79 
D) $83

Gross Profit must always be shown on the face of a single-step income statement

An income statement showing depreciation expense a line item is showing its expenses by nature.

Economic income excludes accounting income.

When reporting net income for a fiscal year,companies must use a 12-month period.

Under IFRS,The statement of comprehensive income includes net income and other comprehensive income.

Under IFRS,to qualify as a discontinued operation or disposal group,the proceeds of a sale must:

Other comprehensive income includes only unrealized gains and losses.When a previously unrecognized gain or loss is recognized later,this gain or loss will always be included in the company's net income in the year recognized.

During the current period,Canada Revenue Agency assessed a firm a nonrecurring income tax amount (but not a penalty) as a result of a Tax Court case involving a disputed deduction from a prior year (the firm lost the case).This amount should be reported by the firm as a (n):

Both extraordinary items and unusual or infrequent items must be reported net of income taxes.

Unusual or infrequent items should be reported separately,but not net of income tax,and not as an extraordinary item.

Other comprehensive income includes unrealized gains on losses of foreign exchange hedges.

Under IFRS,any Assets Held for Sale arising from the discontinuation of a business segment must be classified as current.

The following data are available for 2001 (in 000's): The income tax rate is 40 percent The balance of retained earnings at December 31,2001,was:

The Framework for Financial Reporting

Accounting Judgements

Statements of Financial Position and Changes in Equity; Disclosure Notes

The Statement of Cash Flows

Financial Assets: Cash and Receivables

Cost-Based Inventories and Cost of Sales

Property,Plant,and Equipment; Intangibles; and Goodwill

Depreciation,Amortization,and Impairment

Financial Instruments: Investments in Debt and Equity Securities

Filters

Exam 3: Statements of Income and Comprehensive Income

Gross Profit must always be shown on the face of a single-step income statement

An income statement showing depreciation expense a line item is showing its expenses by nature.

Economic income excludes accounting income.

When reporting net income for a fiscal year,companies must use a 12-month period.

Under IFRS,The statement of comprehensive income includes net income and other comprehensive income.

Under IFRS,to qualify as a discontinued operation or disposal group,the proceeds of a sale must:

Other comprehensive income includes only unrealized gains and losses.When a previously unrecognized gain or loss is recognized later,this gain or loss will always be included in the company's net income in the year recognized.

During the current period,Canada Revenue Agency assessed a firm a nonrecurring income tax amount (but not a penalty) as a result of a Tax Court case involving a disputed deduction from a prior year (the firm lost the case).This amount should be reported by the firm as a (n):

Both extraordinary items and unusual or infrequent items must be reported net of income taxes.

Unusual or infrequent items should be reported separately,but not net of income tax,and not as an extraordinary item.

Other comprehensive income includes unrealized gains on losses of foreign exchange hedges.

Under IFRS,any Assets Held for Sale arising from the discontinuation of a business segment must be classified as current.

The following data are available for 2001 (in 000's): The income tax rate is 40 percent The balance of retained earnings at December 31,2001,was:

The Framework for Financial Reporting

Accounting Judgements

Statements of Financial Position and Changes in Equity; Disclosure Notes

The Statement of Cash Flows

Financial Assets: Cash and Receivables

Cost-Based Inventories and Cost of Sales

Property,Plant,and Equipment; Intangibles; and Goodwill

Depreciation,Amortization,and Impairment

Financial Instruments: Investments in Debt and Equity Securities

Filters