Question 1

On the income statement,the line item that comes before income tax expense is called income from continuing operations.

Accepted Answer

A) True 
 B)False

Question 2

A discontinued operation must be a business segment or unit that generates,or once generated,revenues.

Accepted Answer

A) True 
 B)False

Question 3

Which of the following income statement items is considered to be permanent?

Accepted Answer

A) gains on disposal of equipment 
B) impairment losses 
C) interest expense 
D) discontinued operations 
A) gains on disposal of equipment 
B) impairment losses 
C) interest expense 
D) discontinued operations

Question 4

Why are results from discontinued operations separated from results from continuing operations on an income statement?

Accepted Answer

A company must be able to separate the d

Question 5

Other comprehensive income is comprised of elements explicitly excluded from net income.

Accepted Answer

A) True 
 B)False

Question 6

Paxdot Labs provided the following partial-trial balance for the current year.Beginning with the line item Operating Income,prepare a statement of comprehensive income for the year ended December 31.Paxdot is subject to a 40% income tax rate.

Accepted Answer

@#IMG-DLM& 
 @#IMG-DLM& 
 Other Income,Gains,and L

Question 7

Identify and describe the two primary factors that impact earnings quality.

Accepted Answer

The two factors that impact earnings qua

Question 8

Which of the following items does IFRS require to be presented on the income statement that U.S.GAAP does not require?

Accepted Answer

A) litigation settlements 
B) finance costs 
C) after-tax profit or loss on discontinued operations 
D) restructuring costs 
A) litigation settlements 
B) finance costs 
C) after-tax profit or loss on discontinued operations 
D) restructuring costs

Question 9

Gerogi Company had the following balances for income from continuing operations and pretax gains and losses on December 31:   The company's effective tax rate is 40%.What amount should Gerogi Company report as comprehensive income for the year ended December 31?

Accepted Answer

A) $426,000 
B) $495,600 
C) $606,400 
D) $643,200 
A) $426,000 
B) $495,600 
C) $606,400 
D) $643,200

Question 10

What is the most common approach to earnings management?

Accepted Answer

A) manipulate revenues and gains 
B) rearrange expenses and losses 
C) exploit business combinations 
D) engage in fraudulent activity 
A) manipulate revenues and gains 
B) rearrange expenses and losses 
C) exploit business combinations 
D) engage in fraudulent activity

Question 11

Gerogi Company had the following balances for income from continuing operations and pretax gains and losses on December 31:   The company's effective tax rate is 40%.What amount should Gerogi Company report as comprehensive income for the year ended December 31?

Accepted Answer

A) $95,200 
B) $104,000 
C) $151,200 
D) $196,800 
A) $95,200 
B) $104,000 
C) $151,200 
D) $196,800

Question 12

Which of the following is false concerning the statement of stockholders' equity?

Accepted Answer

A) IFRS require a statement of stockholders' equity. 
B) U)S.GAAP do not require a statement of stockholders' equity. 
C) Net income and dividends close into Retained Earnings. 
D) Other comprehensive income and retirement of repurchased shares close into Accumulated Other Comprehensive Income. 
A) IFRS require a statement of stockholders' equity. 
B) U)S.GAAP do not require a statement of stockholders' equity. 
C) Net income and dividends close into Retained Earnings. 
D) Other comprehensive income and retirement of repurchased shares close into Accumulated Other Comprehensive Income.

Question 13

Clowns-R-Us reported the following in the statement of comprehensive income for the year ended December 31:   During the year,the company paid $105,000 in dividends and purchased treasury stock with a par value of $20,000 at a cost of $95,000.If the balance of Retained Earnings at the beginning of the year was $4,400,000,what is the balance of Retained Earnings at the end of the year?

Accepted Answer

A) $5,145,000 
B) $5,050,000 
C) $4,805,000 
D) $4,710,000 
A) $5,145,000 
B) $5,050,000 
C) $4,805,000 
D) $4,710,000

Question 14

What items are included in a company's income from continuing operations and how are these items categorized if the company uses (a)a multi-step format or (b)a single-step format?

Accepted Answer

Income from continuing operations is inc

Question 15

What is earnings per share and how is it reported in the financial statements?

Accepted Answer

Earnings per share represents the amount

Question 16

Which of the following is not typically included in the determination of income from continuing operations?

Accepted Answer

A) other comprehensive income 
B) income tax provision 
C) non-operating items 
D) earnings before interest and taxes 
A) other comprehensive income 
B) income tax provision 
C) non-operating items 
D) earnings before interest and taxes

Question 17

Elements of other comprehensive income are primarily permanent in nature.

Accepted Answer

A) True 
 B)False

Question 18

The "cookie jar reserves" earnings management technique involves ________.

Accepted Answer

A) increasing earnings in the current period in anticipation of significant future decreases 
B) decreasing losses in the current period to allow the firm to show increased net income in the future 
C) increasing earnings so as to increase managers' compensation 
D) increasing losses in the current period to allow the firm to show increased net income in the future 
A) increasing earnings in the current period in anticipation of significant future decreases 
B) decreasing losses in the current period to allow the firm to show increased net income in the future 
C) increasing earnings so as to increase managers' compensation 
D) increasing losses in the current period to allow the firm to show increased net income in the future

Question 19

What is the amount of income from continuing operations for Cambridge Company?

Accepted Answer

A) $1,575 
B) $1,961 
C) $2,809 
D) $3,195 
A) $1,575 
B) $1,961 
C) $2,809 
D) $3,195

Question 20

What is the amount of operating income for Tuche Millinery?

Accepted Answer

A) $602 
B) $587 
C) $247 
D) $232 
A) $602 
B) $587 
C) $247 
D) $232

Exam 5: Statements of Net Income and Comprehensive Net Income

On the income statement,the line item that comes before income tax expense is called income from continuing operations.

A discontinued operation must be a business segment or unit that generates,or once generated,revenues.

Which of the following income statement items is considered to be permanent?

Why are results from discontinued operations separated from results from continuing operations on an income statement?

Other comprehensive income is comprised of elements explicitly excluded from net income.

Paxdot Labs provided the following partial-trial balance for the current year.Beginning with the line item Operating Income,prepare a statement of comprehensive income for the year ended December 31.Paxdot is subject to a 40% income tax rate.

Identify and describe the two primary factors that impact earnings quality.

Which of the following items does IFRS require to be presented on the income statement that U.S.GAAP does not require?

Gerogi Company had the following balances for income from continuing operations and pretax gains and losses on December 31: The company's effective tax rate is 40%.What amount should Gerogi Company report as comprehensive income for the year ended December 31?

What is the most common approach to earnings management?

Gerogi Company had the following balances for income from continuing operations and pretax gains and losses on December 31: The company's effective tax rate is 40%.What amount should Gerogi Company report as comprehensive income for the year ended December 31?

Which of the following is false concerning the statement of stockholders' equity?

What items are included in a company's income from continuing operations and how are these items categorized if the company uses (a)a multi-step format or (b)a single-step format?

What is earnings per share and how is it reported in the financial statements?

Which of the following is not typically included in the determination of income from continuing operations?

Elements of other comprehensive income are primarily permanent in nature.

The "cookie jar reserves" earnings management technique involves ________.

What is the amount of income from continuing operations for Cambridge Company?

What is the amount of operating income for Tuche Millinery?

The Financial Reporting Environment

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Statements of Financial Position and Cash Flows and the Annual Report

Accounting and the Time Value of Money

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Short-Term Operating Assets: Inventory

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Operating Liabilities and Contingencies

OL: Operating Liabilities and Contingencies

Financing Liabilities

Accounting for Stockholders Equity

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