Question 1

Cost is the economic sacrifice made to acquire goods or services.

Accepted Answer

A) True 
 B)False

Question 2

Assume that U.S.GAAP and IFRS require firms to remeasure the amount of a particular asset from $12 million to $8 million because of economic events.Which of the following journal entries should the company make?

Accepted Answer

A) Miscellaneous Expense 4,000,000 Asset 4,000,000 
B) Other Comprehensive Income 4,000,000 Miscellaneous Revenue 4,000,000 
C) Other Comprehensive Income 4,000,000 Asset 4,000,000 
D) Asset 4,000,000 Other Comprehensive Income 4,000,000 
E) None of these answer choices is correct. 
A) Miscellaneous Expense 4,000,000 Asset 4,000,000 
B) Other Comprehensive Income 4,000,000 Miscellaneous Revenue 4,000,000 
C) Other Comprehensive Income 4,000,000 Asset 4,000,000 
D) Asset 4,000,000 Other Comprehensive Income 4,000,000 
E) None of these answer choices is correct.

Question 3

U.S.GAAP and IFRS distinguish between revenues and expenses on the one hand and gains and losses on the other.Which of the following is/are not true?

Accepted Answer

A) Revenues and expenses result from the recurring, primary operating activities of a business. 
B) Income items include the ordinary, recurring operating activities of the firm. 
C) Gains and losses result from either peripheral activities or nonrecurring activities. 
D) The reporting of revenues and expenses are at gross amounts, and firms report gains and losses at net amounts. 
E) Gains and losses result from the recurring, primary operating activities of a business. 
A) Revenues and expenses result from the recurring, primary operating activities of a business. 
B) Income items include the ordinary, recurring operating activities of the firm. 
C) Gains and losses result from either peripheral activities or nonrecurring activities. 
D) The reporting of revenues and expenses are at gross amounts, and firms report gains and losses at net amounts. 
E) Gains and losses result from the recurring, primary operating activities of a business.

Question 4

A firm sells its headquarters building at a gain. This means that at the time of sale

Accepted Answer

A) the cash or other assets received were greater than the building's book value. 
B) the cash or assets received in a transaction were less than the carrying value of the assets given up. 
C) the cash or other assets received were greater than the building' carrying value. 
D) the cash or assets received in a transaction were less than the building's book value. 
E) both choices a and c are correct. 
A) the cash or other assets received were greater than the building's book value. 
B) the cash or assets received in a transaction were less than the carrying value of the assets given up. 
C) the cash or other assets received were greater than the building' carrying value. 
D) the cash or assets received in a transaction were less than the building's book value. 
E) both choices a and c are correct.

Question 5

Ralston Company has two divisions, X and Y.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 Division Y.It is probable that the disposal will be completed early next year.The revenues and expenses of Ralston Company for 2014 and for the preceding two years are as follows:
 $\begin{array}{lllr}&2014&2013&2012\
\text { Sales-Division X } & 20,000 & 18,400 & 17,000 \
\text { Sales-Division Y } & 15,000 & 16,200 & 18,000 \
\text { Total non tax expenses-X } & 14,000 & 16,200 & 15,000 \
\text { Total non tax expenses-Y } & 15,900 & 15,000 & 15,400
\end{array}$ During the latter part of 2014, Ralston disposed of a portion of Division Y and recognized a pretax loss of $8,000 on the disposal.The income tax rate for Ralston Company is 40%.

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

Accepted Answer

The answer of Ralston Company has two divisions, X and...

Question 6

The accounting records for Magic Chocolate Castle contained the following data for the current year:
 $\begin{array}{ll}
\text { Sales } & \$ 517,500 \
\text { Cost of goods sold } & 213,800 \
\text { Interest revenue } & 6,500 \
\text { Rent revenue } & 3,600 \
\text { Administrative expense } & 131,300\\text { Selling expense } & 133,600 \
\text { Interest expense } & 15,400 \
\text { Income tax expense } & 8,100 \
\text { Loss on sale of warehouse } & 6,500
\end{array}$ Required:
Prepare both a single-step and a multi-step income statement for Magic for the current year.

Accepted Answer

@#IMG-DLM& Multi-ste

Question 7

Which of the following is/are true?

Accepted Answer

A) Revenues measure the inflow of net assets from operating activities. 
B) Expenses measure the outflow of net assets consumed in the process of generating revenues. 
C) Recognizing revenues and expenses always involves a simultaneous entry in an asset and/or liability account. 
D) Adjusting entries almost always involve an entry in at least one income statement and one balance sheet account. 
E) All of the above are true. 
A) Revenues measure the inflow of net assets from operating activities. 
B) Expenses measure the outflow of net assets consumed in the process of generating revenues. 
C) Recognizing revenues and expenses always involves a simultaneous entry in an asset and/or liability account. 
D) Adjusting entries almost always involve an entry in at least one income statement and one balance sheet account. 
E) All of the above are true.

Question 8

Both U.S.GAAP and IFRS require the disclosure, in the notes to the financial statements, of selected information about business segments.

Accepted Answer

A) True 
 B)False

Question 9

Which of the following is/are true?

Accepted Answer

A) The seller measures revenue as the amount of cash, or the cash-equivalent value of other assets, that it receives from customers. 
B) The seller measures revenue amounts as the exchange price between buyer and seller at the time of sale. 
C) If the firm has not performed all of its obligations, it may make adjustments in the form of sales discounts and allowances. 
D) If the firm has not performed all of its obligations, it may make adjustments in the form of sales returns. 
E) all of the above are true 
A) The seller measures revenue as the amount of cash, or the cash-equivalent value of other assets, that it receives from customers. 
B) The seller measures revenue amounts as the exchange price between buyer and seller at the time of sale. 
C) If the firm has not performed all of its obligations, it may make adjustments in the form of sales discounts and allowances. 
D) If the firm has not performed all of its obligations, it may make adjustments in the form of sales returns. 
E) all of the above are true

Question 10

Which of the following is/are not a period expense?

Accepted Answer

A) administrative expenditures 
B) expenditures on advertising 
C) rent on a warehouse for the current month 
D) cost of goods sold 
E) all of the above are period expenses 
A) administrative expenditures 
B) expenditures on advertising 
C) rent on a warehouse for the current month 
D) cost of goods sold 
E) all of the above are period expenses

Question 11

Comprehensive income as defined by the FASB

Accepted Answer

A) must be reported on the face of the income statement. 
B) includes all changes in equity during a period except those resulting from investments by and distributions to owners. 
C) is the net change in owners' equity for the period. 
D) means the same as net income. 
E) None of these answer choices is correct. 
A) must be reported on the face of the income statement. 
B) includes all changes in equity during a period except those resulting from investments by and distributions to owners. 
C) is the net change in owners' equity for the period. 
D) means the same as net income. 
E) None of these answer choices is correct.

Question 12

What are the criteria for revenue recognition?

Accepted Answer

CRITERIA FOR REVENUE RECOGNITION
As a ge

Question 13

A manufacturing firm has manufacturing costs which become product costs. These manufacturing costs do not include:

Accepted Answer

A) direct material costs (or raw material costs) 
B) direct labor costs 
C) manufacturing overhead costs (sometimes called indirect manufacturing costs) 
D) expenditures for administrative staff 
E) expenditures for supervisors' salaries, factory utilities, property taxes, insurance, and depreciation on manufacturing plant and equipment 
A) direct material costs (or raw material costs) 
B) direct labor costs 
C) manufacturing overhead costs (sometimes called indirect manufacturing costs) 
D) expenditures for administrative staff 
E) expenditures for supervisors' salaries, factory utilities, property taxes, insurance, and depreciation on manufacturing plant and equipment

Question 14

Which of the following is/are not a component of comprehensive income?

Accepted Answer

A) Asset revaluation reserve 
B) Net income 
C) Foreign currency translation adjustment 
D) Minimum pension liability adjustment 
E) All of these are components of comprehensive income. 
A) Asset revaluation reserve 
B) Net income 
C) Foreign currency translation adjustment 
D) Minimum pension liability adjustment 
E) All of these are components of comprehensive income.

Question 15

Which of the following is/are not true concerning accumulated other comprehensive income?

Accepted Answer

A) Firms measure marketable equity securities classified as available for sale at fair value and record the unrealized changes in fair value as an element of other comprehensive income. 
B) Firms remeasure derivatives designated as cash flow hedges to fair value at the end of each period and report the unrealized gain or loss in other comprehensive income. 
C) Firms translate the reported results of their foreign operations from local currencies into U.S.dollars in order to prepare consolidated financial statements. 
D) Firms must include gains and losses from changes in actuarial assumptions, actuarial performance, and prior service cost in other comprehensive income prior to their amortization as an adjustment to pension expense. 
E) none of the above 
A) Firms measure marketable equity securities classified as available for sale at fair value and record the unrealized changes in fair value as an element of other comprehensive income. 
B) Firms remeasure derivatives designated as cash flow hedges to fair value at the end of each period and report the unrealized gain or loss in other comprehensive income. 
C) Firms translate the reported results of their foreign operations from local currencies into U.S.dollars in order to prepare consolidated financial statements. 
D) Firms must include gains and losses from changes in actuarial assumptions, actuarial performance, and prior service cost in other comprehensive income prior to their amortization as an adjustment to pension expense. 
E) none of the above

Question 16

Which of the following is/are not true?

Accepted Answer

A) Net income or profit for a period is the difference between revenues from selling goods and services and the expenses incurred to generate those revenues, plus some gains or losses of the period. 
B) If the expenses plus losses exceed the revenues plus gains, the result is a net loss. 
C) U.S.GAAP and IFRS require the accrual basis of accounting, which detaches the recognition of revenue from the receipt of cash. 
D) A seller recognizes revenues when it has performed all, or nearly all, of its obligations to the customer and when it has received cash or an asset that is convertible to cash. 
E) The firm recognizes and reports expenses that have a causal link with revenues, such as cost of sales, in the next accounting period. 
A) Net income or profit for a period is the difference between revenues from selling goods and services and the expenses incurred to generate those revenues, plus some gains or losses of the period. 
B) If the expenses plus losses exceed the revenues plus gains, the result is a net loss. 
C) U.S.GAAP and IFRS require the accrual basis of accounting, which detaches the recognition of revenue from the receipt of cash. 
D) A seller recognizes revenues when it has performed all, or nearly all, of its obligations to the customer and when it has received cash or an asset that is convertible to cash. 
E) The firm recognizes and reports expenses that have a causal link with revenues, such as cost of sales, in the next accounting period.

Question 17

Historically, recognition has described a preference for financial reporting such "that possible errors in measurement be in the direction of understatement rather than overstatement of net income and net assets."

Accepted Answer

A) True 
 B)False

Question 18

U.S.GAAP and IFRS distinguish between revenues and expenses on the one hand and gains and losses on the other.Which of the following is/are true?

Accepted Answer

A) Revenues and expenses result from the recurring, primary operating activities of a business. 
B) Income items include the ordinary, recurring operating activities of the firm. 
C) Gains and losses result from either peripheral activities or nonrecurring activities. 
D) The reporting of revenues and expenses are at gross amounts, and firms report gains and losses at net amounts. 
E) all of the above 
A) Revenues and expenses result from the recurring, primary operating activities of a business. 
B) Income items include the ordinary, recurring operating activities of the firm. 
C) Gains and losses result from either peripheral activities or nonrecurring activities. 
D) The reporting of revenues and expenses are at gross amounts, and firms report gains and losses at net amounts. 
E) all of the above

Question 19

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

Accepted Answer

A) Gains/Losses 
B) Revenues 
C) Expenses 
D) Assets 
E) Liabilities 
A) Gains/Losses 
B) Revenues 
C) Expenses 
D) Assets 
E) Liabilities

Question 20

Which of the following is/are correct?

Accepted Answer

A) Discontinued operations are shown as the last category after income from continuing operations. 
B) The discontinued operations section of the income statement consists only of the gain or loss on disposal of the discontinued component net of the tax effect. 
C) The discontinued operations section of the income statement consists only of the income or loss from operating the discontinued component net of the tax effect. 
D) The discontinued operations section of the income statement consists of the income or loss from operating the discontinued component net of the tax effect as well as the gain or loss on disposal of the discontinued component net of the tax effect. 
E) None of these answer choices is correct. 
A) Discontinued operations are shown as the last category after income from continuing operations. 
B) The discontinued operations section of the income statement consists only of the gain or loss on disposal of the discontinued component net of the tax effect. 
C) The discontinued operations section of the income statement consists only of the income or loss from operating the discontinued component net of the tax effect. 
D) The discontinued operations section of the income statement consists of the income or loss from operating the discontinued component net of the tax effect as well as the gain or loss on disposal of the discontinued component net of the tax effect. 
E) None of these answer choices is correct.

Cost is the economic sacrifice made to acquire goods or services.

Assume that U.S.GAAP and IFRS require firms to remeasure the amount of a particular asset from $12 million to $8 million because of economic events.Which of the following journal entries should the company make?

U.S.GAAP and IFRS distinguish between revenues and expenses on the one hand and gains and losses on the other.Which of the following is/are not true?

A firm sells its headquarters building at a gain. This means that at the time of sale

Which of the following is/are true?

Both U.S.GAAP and IFRS require the disclosure, in the notes to the financial statements, of selected information about business segments.

Which of the following is/are true?

Which of the following is/are not a period expense?

Comprehensive income as defined by the FASB

What are the criteria for revenue recognition?

A manufacturing firm has manufacturing costs which become product costs. These manufacturing costs do not include:

Which of the following is/are not a component of comprehensive income?

Which of the following is/are not true concerning accumulated other comprehensive income?

Which of the following is/are not true?

Historically, recognition has described a preference for financial reporting such "that possible errors in measurement be in the direction of understatement rather than overstatement of net income and net assets."

U.S.GAAP and IFRS distinguish between revenues and expenses on the one hand and gains and losses on the other.Which of the following is/are true?

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

Which of the following is/are correct?

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

Cost is the economic sacrifice made to acquire goods or services.

Assume that U.S.GAAP and IFRS require firms to remeasure the amount of a particular asset from $12 million to $8 million because of economic events.Which of the following journal entries should the company make?

U.S.GAAP and IFRS distinguish between revenues and expenses on the one hand and gains and losses on the other.Which of the following is/are not true?

A firm sells its headquarters building at a gain. This means that at the time of sale

Which of the following is/are true?

Both U.S.GAAP and IFRS require the disclosure, in the notes to the financial statements, of selected information about business segments.

Which of the following is/are true?

Which of the following is/are not a period expense?

Comprehensive income as defined by the FASB

What are the criteria for revenue recognition?

A manufacturing firm has manufacturing costs which become product costs. These manufacturing costs do not include:

Which of the following is/are not a component of comprehensive income?

Which of the following is/are not true concerning accumulated other comprehensive income?

Which of the following is/are not true?

Historically, recognition has described a preference for financial reporting such "that possible errors in measurement be in the direction of understatement rather than overstatement of net income and net assets."

U.S.GAAP and IFRS distinguish between revenues and expenses on the one hand and gains and losses on the other.Which of the following is/are true?

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

Which of the following is/are correct?

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