Question 1

Both U.S.GAAP and IFRS require firms to report certain information about each of their operating segments.

Accepted Answer

A) True 
 B)False

Question 2

Which of the following most likely would be considered a discontinued operation?

Accepted Answer

A) Production or marketing functions are shifted from one location to another. 
B) A sporting goods manufacturer has a bicycle division that meets FASB's definition of a component of the entity and decides to outsource the manufacture of its bicycles. 
C) The unprofitable brands of a beauty products component of an entity that manufactures and sells consumer products are discontinued. 
D) An entity that is a franchiser in the quick-service restaurant business also operates company-owned restaurants that are unprofitable in a certain region and, as a result, the entity decides to exit both the quick-service business as well as the company-owned restaurants in that region. 
E) None of these answer choices is correct. 
A) Production or marketing functions are shifted from one location to another. 
B) A sporting goods manufacturer has a bicycle division that meets FASB's definition of a component of the entity and decides to outsource the manufacture of its bicycles. 
C) The unprofitable brands of a beauty products component of an entity that manufactures and sells consumer products are discontinued. 
D) An entity that is a franchiser in the quick-service restaurant business also operates company-owned restaurants that are unprofitable in a certain region and, as a result, the entity decides to exit both the quick-service business as well as the company-owned restaurants in that region. 
E) None of these answer choices is correct.

Question 3

Chicago Company has two divisions, A andB. The operations and cash flows of these two divisions are clearly distinguishable.On July 1, 2014, the company decided to dispose of the assets and liabilities of DivisionB.It is probable that the disposal will be completed early next year.The revenues and expenses of Chicago Company for 2014 and for the preceding two years are as follows:
 $\begin{array}{llll}&2014&2013&2012\
\text { Sales-Division A } & 40,000 & 36,800 & 34,000 \
\text { Sales-Division B } & 30,000 & 32,400 & 36,000 \
\text { Total non tax expenses-A } & 28,000 & 32,400 & 30,000 \
\text { Total non tax expenses-B } & 31,800 & 30,000 & 30,800
\end{array}$ 
During the latter part of 2014, Chicago disposed of a portion of Division B and recognized a pretax loss of $10,000 on the disposal.The income tax rate for Chicago Company is 40%.

Prepare the comparative income statements for Chicago Company for the years 2012, 2013, and 2014.

Accepted Answer

The answer of Chicago Company has two divisions, A andB....

Question 4

Describe items appearing in accumulated other comprehensive income. What is comprehensive income and what does the shareholders' equity section of the balance sheet report?

Accepted Answer

ACCUMULATED OTHER COMPREHENSIVE INCOME
U

Question 5

Solve for the unknown item for each of the following independent situations.
 $\begin{array}{llll}&\text { CASE A }&\text { CASE B }&\text { CASE C }\
\text { Total assets } & \text { A } & 400 & 600 \
\text { Contributed capital } & 100 & 150 & \text { C } \
\text { Total revenues } & 400 & 300 & 400 \
\text { Total liabilities } & 600 & \text { B } & 250 \
\text { Beginning retained earnings } & (50) & 100 & 100 \
\text { Total expenses } & 250 & 350 & 200 \
\text { Dividends } & 0 & 50 & 0
\end{array}$

Accepted Answer

The answer of Solve for the unknown item for each...

Question 6

Gains/Losses arise from relatively infrequent transactions, and there can be no assurance that they will recur in any future period.

Accepted Answer

A) True 
 B)False

Question 7

U.S.GAAP and IFRS require firms to disclose unrealized gains and losses that historically have bypassed the income statement in a category called other comprehensive income.

Accepted Answer

A) True 
 B)False

Question 8

Expenses measure the outflow of net assets consumed in the process of generating revenues.

Accepted Answer

A) True 
 B)False

Question 9

According to the FASB's conceptual framework, comprehensive income includes which of the following? 
$\text { Gross Profit } \quad \text { Operating Income }$

Accepted Answer

A) $\text { No } \quad \text { No }$ 
B)  $\text { No } \quad \text { Yes }$ 
C)  $\text { Yes } \quad \text { Yes }$ 
D)  $\text { Yes } \quad \text { No }$ 
E) None of these answer choices is correct. 
A) $\text { No } \quad \text { No }$ 
B)  $\text { No } \quad \text { Yes }$ 
C)  $\text { Yes } \quad \text { Yes }$ 
D)  $\text { Yes } \quad \text { No }$ 
E) None of these answer choices is correct.

Question 10

Which of the following is/are true?

Accepted Answer

A) Cost is the economic sacrifice made to acquire goods or services 
B) When the good or service acquired has reliably measurable future benefits to a firm, the cost is an asset. 
C) When the firm consumes the good or service, the cost is an expense. 
D) All of the above are true. 
E) None of the above are true. 
A) Cost is the economic sacrifice made to acquire goods or services 
B) When the good or service acquired has reliably measurable future benefits to a firm, the cost is an asset. 
C) When the firm consumes the good or service, the cost is an expense. 
D) All of the above are true. 
E) None of the above are true.

Question 11

Which of the following is/are true?

Accepted Answer

A) After cost of sales, the income statement typically shows deductions for other expenses associated with operations (other operating expenses). 
B) Many firms present a subtotal called operating income or operating profit, the difference between revenues and expenses associated with core operating activities. 
C) two common types of operating expenses are selling, general, and administrative expenses (SG&
A)  and research and development expenses (R&
D) . 
D) all of the above 
E) none of the above 
A) After cost of sales, the income statement typically shows deductions for other expenses associated with operations (other operating expenses). 
B) Many firms present a subtotal called operating income or operating profit, the difference between revenues and expenses associated with core operating activities. 
C) two common types of operating expenses are selling, general, and administrative expenses (SG&
A)  and research and development expenses (R&
D) . 
D) all of the above 
E) none of the above

Question 12

Subtracting nonoperating expenses from operating income yields:

Accepted Answer

A) income tax expense 
B) profit before income taxes 
C) net income 
D) gross profit 
E) none of the above 
A) income tax expense 
B) profit before income taxes 
C) net income 
D) gross profit 
E) none of the above

Question 13

When assets and income from operations that a firm has decided to discontinue (and dispose of or abandon), separating the two income components allows users to form better predictions of

Accepted Answer

A) past earnings. 
B) current earnings. 
C) future earnings. 
D) all of the above 
E) none of the above 
A) past earnings. 
B) current earnings. 
C) future earnings. 
D) all of the above 
E) none of the above

Question 14

Accumulated Other Comprehensive Income

Accepted Answer

A) is a shareholders' equity account on the balance sheet. 
B) reports the cumulative amounts of other comprehensive income as of the date of the balance sheet. 
C) equals net income on the traditional income statement plus other comprehensive income for the period. 
D) is both choices a and b. 
E) is all choices a, b, and c. 
A) is a shareholders' equity account on the balance sheet. 
B) reports the cumulative amounts of other comprehensive income as of the date of the balance sheet. 
C) equals net income on the traditional income statement plus other comprehensive income for the period. 
D) is both choices a and b. 
E) is all choices a, b, and c.

Question 15

Revenue recognition is among the most complex issues in financial reporting. The quantity and complexity of the authoritative guidance for recognizing revenues result(s) from

Accepted Answer

A) misreporting of revenues. 
B) reporting revenues before the firm earns them. 
C) reporting nonexistent revenues. 
D) firms bundling products and services and selling them in multiple-element arrangements. 
E) all of the above. 
A) misreporting of revenues. 
B) reporting revenues before the firm earns them. 
C) reporting nonexistent revenues. 
D) firms bundling products and services and selling them in multiple-element arrangements. 
E) all of the above.

Question 16

Other (nonoperating) items follow operating expenses or the subtotal for operating profit.Most firms reporting under U.S.GAAP separately report financing costs, such as

Accepted Answer

A) principal payments. 
B) interest revenue. 
C) interest expense. 
D) principal receipts. 
E) none of the above 
A) principal payments. 
B) interest revenue. 
C) interest expense. 
D) principal receipts. 
E) none of the above

Question 17

Flair and Glory incorporate as FG Designs, Inc.on January 1, Year 1.FG Designs creates custom wall finishes and sells painting products.The following transactions occur during January.

a. Glory contributes cash of $85,000 and receives 15,000 shares of $1 par value stock.
b. Flair contributes $45,000 cash, office furniture with a value of $5,000, and computer equipment with a value of $10,000 and receives 15,000 shares of $1 par value stock. The furniture and equipment is expected to last 5 years and has no salvage value.
c. On January 2, $12,000 of painting products were purchased. FG paid $8,000 cash with the remaining amount on account.
d. During January, painting products are sold for $10,000 cash. The cost of the products is $3,000.
e. Additional painting products with a value of $6,500 are sold, with a cost of $2,500, but the cash is not collected as of January 31st. It is expected that the $6,500 will be collected in full by February 15th.
f. Glory is paid a salary of $3,300.
g. FG paid $1,800 for January and February rent. 
Required:
Prepare appropriate accrual basis journal entries.

Accepted Answer

a. Cash 85,000
Common Stock 15,000
Addit

Question 18

Most firms display the components of cost of sales.

Accepted Answer

A) True 
 B)False

Question 19

Common terminology, but not definitions in U.S.GAAP and IFRS, often refers to the difference between sales and cost of sales as gross

Accepted Answer

A) sales. 
B) profit. 
C) operations. 
D) all of the above 
E) none of the above 
A) sales. 
B) profit. 
C) operations. 
D) all of the above 
E) none of the above

Question 20

Common terminology, but not definitions in U.S.GAAP and IFRS, often refers to the difference between sales and cost of sales as gross margin, gross profit, or gross income.

Accepted Answer

A) True 
 B)False

Both U.S.GAAP and IFRS require firms to report certain information about each of their operating segments.

Which of the following most likely would be considered a discontinued operation?

Describe items appearing in accumulated other comprehensive income. What is comprehensive income and what does the shareholders' equity section of the balance sheet report?

Solve for the unknown item for each of the following independent situations. CASE A CASE B CASE C Total assets A 400 600 Contributed capital 100 150 C Total revenues 400 300 400 Total liabilities 600 B 250 Beginning retained earnings (50) 100 100 Total expenses 250 350 200 Dividends 0 50 0

Gains/Losses arise from relatively infrequent transactions, and there can be no assurance that they will recur in any future period.

U.S.GAAP and IFRS require firms to disclose unrealized gains and losses that historically have bypassed the income statement in a category called other comprehensive income.

Expenses measure the outflow of net assets consumed in the process of generating revenues.

According to the FASB's conceptual framework, comprehensive income includes which of the following? $\text { Gross Profit } \quad \text { Operating Income }$

Which of the following is/are true?

Which of the following is/are true?

Subtracting nonoperating expenses from operating income yields:

When assets and income from operations that a firm has decided to discontinue (and dispose of or abandon), separating the two income components allows users to form better predictions of

Accumulated Other Comprehensive Income

Revenue recognition is among the most complex issues in financial reporting. The quantity and complexity of the authoritative guidance for recognizing revenues result(s) from

Other (nonoperating) items follow operating expenses or the subtotal for operating profit.Most firms reporting under U.S.GAAP separately report financing costs, such as

Most firms display the components of cost of sales.

Common terminology, but not definitions in U.S.GAAP and IFRS, often refers to the difference between sales and cost of sales as gross

Common terminology, but not definitions in U.S.GAAP and IFRS, often refers to the difference between sales and cost of sales as gross margin, gross profit, or gross income.

Introduction to Business Activities and Overview of Financial Statements and the Reporting Process

The Basics of Record Keeping and Financial Statement Preparation: Balance Sheet

The Basics of Record Keeping and Financial Statement Preparation: Income Statement

Balance Sheet: Presenting and Analyzing Resources and Financing

Statement of Cash Flows

Introduction to Financial Statement Analysis

Revenue Recognition, Receivables, and Advances From Customers

Working Capital

Long-Lived Tangible and Intangible Assets

Notes, Bonds, and Leases

Liabilities: Off-Balance Sheet Financing, Retirement Benefits, and Income Taxes

Marketable Securities and Derivatives

Intercorporate Investments in Common Stock

Shareholders Equity: Capital Contributions and Distributions

Statement of Cash Flows: Another Look

Synthesis and Extensions

Filters

Exam 5: Income Statement: Reporting Results of Operating Activities

Both U.S.GAAP and IFRS require firms to report certain information about each of their operating segments.

Which of the following most likely would be considered a discontinued operation?

Describe items appearing in accumulated other comprehensive income. What is comprehensive income and what does the shareholders' equity section of the balance sheet report?

Solve for the unknown item for each of the following independent situations. CASE A CASE B CASE C Total assets A 400 600 Contributed capital 100 150 C Total revenues 400 300 400 Total liabilities 600 B 250 Beginning retained earnings (50) 100 100 Total expenses 250 350 200 Dividends 0 50 0

Gains/Losses arise from relatively infrequent transactions, and there can be no assurance that they will recur in any future period.

U.S.GAAP and IFRS require firms to disclose unrealized gains and losses that historically have bypassed the income statement in a category called other comprehensive income.

Expenses measure the outflow of net assets consumed in the process of generating revenues.

According to the FASB's conceptual framework, comprehensive income includes which of the following? Gross Profit Operating Income \text { Gross Profit } \quad \text { Operating Income } Gross Profit Operating Income

Which of the following is/are true?

Which of the following is/are true?

Subtracting nonoperating expenses from operating income yields:

When assets and income from operations that a firm has decided to discontinue (and dispose of or abandon), separating the two income components allows users to form better predictions of

Accumulated Other Comprehensive Income

Revenue recognition is among the most complex issues in financial reporting. The quantity and complexity of the authoritative guidance for recognizing revenues result(s) from

Other (nonoperating) items follow operating expenses or the subtotal for operating profit.Most firms reporting under U.S.GAAP separately report financing costs, such as

Most firms display the components of cost of sales.

Common terminology, but not definitions in U.S.GAAP and IFRS, often refers to the difference between sales and cost of sales as gross

Common terminology, but not definitions in U.S.GAAP and IFRS, often refers to the difference between sales and cost of sales as gross margin, gross profit, or gross income.

Introduction to Business Activities and Overview of Financial Statements and the Reporting Process

The Basics of Record Keeping and Financial Statement Preparation: Balance Sheet

The Basics of Record Keeping and Financial Statement Preparation: Income Statement

Balance Sheet: Presenting and Analyzing Resources and Financing

Statement of Cash Flows

Introduction to Financial Statement Analysis

Revenue Recognition, Receivables, and Advances From Customers

Working Capital

Long-Lived Tangible and Intangible Assets

Notes, Bonds, and Leases

Liabilities: Off-Balance Sheet Financing, Retirement Benefits, and Income Taxes

Marketable Securities and Derivatives

Intercorporate Investments in Common Stock

Shareholders Equity: Capital Contributions and Distributions

Statement of Cash Flows: Another Look

Synthesis and Extensions

Filters

According to the FASB's conceptual framework, comprehensive income includes which of the following? $\text { Gross Profit } \quad \text { Operating Income }$