Question 1

An operating segment is a component of a company

Accepted Answer

A)  that engages in business activities to earn revenues and incur expenses. 
B)  whose operating results are regularly reviewed by the company's chief operating officer for budgeting and evaluation purposes. 
C)  for which financial information is available. 
D)  All of these types of companies would have an operating segment as a component.

Question 2

Intraperiod tax allocation requires a corporation's total income tax expense to be allocated to all of the following except

Accepted Answer

A)  any items of other comprehensive income. 
B)  other revenues and expenses. 
C)  discontinued operations. 
D)  prior-period adjustments.

Question 3

Which of the following is required to be disclosed, pursuant to GAAP?

Accepted Answer

A)  operating income or loss from discontinued component reported on the income statement 
B)  a description of facts and circumstances leading up to the sale of a discontinued component within the notes of the financial statements 
C)  all gains or losses from sale of the component reported on the income statement or in the footnotes 
D)  All of these answer choices are correct.

Question 4

The following cash flows and other information pertain to Elon Company for 2016:  Prepare the operating activities section of the statement of cash flows for 2016, using the direct method.

Accepted Answer

The answer of The following cash flows and other information...

Question 5

The primary purpose of a company's statement of cash flows is to provide information about the company's

Accepted Answer

A)  operations. 
B)  dividend policy. 
C)  financing and investing activities. 
D)  cash receipts and cash payments during the period.

Question 6

List five purposes of the income statement.

Accepted Answer

The answer of List five purposes of the income statement....

Question 7

The accounting profession has developed three alternatives for matching expenses: association of cause and effect, systematic and rational allocation, and immediate recognition. Discuss the conceptual merits of each alternative and give two examples for each expense matching alternative.

Accepted Answer

The answer of The accounting profession has developed three alternatives...

Question 8

Differences that currently exist between IFRS and U.S. GAAP with regard to the presentation of information on the income statement include all of the following except

Accepted Answer

A)  different acceptable terminology relating to revenue items. 
B)  depreciation measures differ when equipment has been revalued. 
C)  different performance measures such as EBITDA are permitted under IFRS. 
D)  differences resulting because IFRS does not require the use of accrual accounting under the historical cost framework.

Question 9

Which of the following is not considered part of comprehensive income?

Accepted Answer

A)  translation adjustments from financial statement conversions 
B)  gains and losses on derivative financial instruments 
C)  gains and losses associated with the sale of a business component 
D)  gain and losses associated with adjustments to pension plan assets and liabilities

Question 10

Financial flexibility is generally defined as

Accepted Answer

A)  the ability of a company to adapt to unexpected needs and opportunities. 
B)  the uncertainty or unpredictability of the future results of a company. 
C)  a measure of overall company performance. 
D)  a company's ability to maintain a given level of operations.

Question 11

Describe the major differences that still exist between the income statement information presentation requirements under IFRS and GAAP.

Accepted Answer

The answer of Describe the major differences that still exist...

Question 12

The following items involve the cash flow activities of Prizzie Company for 2016:  Prepare the statement of cash flows of Prizzie Company for 2016 using the indirect method.

Accepted Answer

The answer of The following items involve the cash flow...

Question 13

An operating segment is a component of a company that does all of the following except

Accepted Answer

A)  has financial information available. 
B)  engages in business activities to earn revenues and incur expenses. 
C)  is part of a publicly held company. 
D)  has operating results that are regularly reviewed by the company's chief operating officer.

Question 14

The SEC scrutinizes reported earnings numbers to assess the quality of earnings and to detect any potential for earnings management.

Accepted Answer

A) True 
 B)False

Question 15

The information below is taken from the December 31, 2016 adjusted trial balance of Rummer Company: 
 The inventory on December 31, 2016 was $165,000. The income tax rate is 30%. There were 25,000 shares of common stock outstanding throughout the year.
Required: 
a. Prepare a schedule of the cost of goods sold.
b. Prepare a 2016 income statement for Rummer Company, using a multiple-step format disregard earnings per share).
c. Prepare a 2016 income statement for Rummer Company, using a single-step format disregard earnings per share).

Accepted Answer

The answer of The information below is taken from the...

Question 16

On December 31, 2016, Melissa Company's adjusted trial balance contained the following account balances:  The income tax rate is 30%, and the company had 2,000 shares of common stock outstanding during the year.
Required: 
a. Prepare the income statement for the year 2016 that includes comprehensive income.
b. Prepare the income statement for the year 2016 and a separate statement of comprehensive income.

Accepted Answer

The answer of On December 31, 2016, Melissa Company's adjusted...

Question 17

Below are the Consolidated Statements of Earnings in part) for Starlights, Inc.

Accepted Answer

The answer of Below are the Consolidated Statements of Earnings...

Question 18

In distinguishing between revenues and gains, which of the following statements is false?

Accepted Answer

A)  More gains than revenues are beyond the entity's control. 
B)  Gains are associated more with peripheral, nonoperating activities than are revenues. 
C)  GAAP does not provide precise distinctions between revenues and gains. 
D)  Revenues are reported net rather than gross) more often than gains.

Question 19

When a company classifies a component as held for sale, it must report the component on its balance sheet at the lower of its book value or its fair value minus costs to sell.

Accepted Answer

A) True 
 B)False

Question 20

On October 1, 2016, Croatan Corporation finalized its plans to discontinue operations of its retail component. The plan calls for the sale of the retail operations to another company for $700,000 current fair value) on April l, 2017. The current book value of the assets is $800,000. For the first nine months of 2016, the component incurred a pretax operating income of $60,000. During the last quarter of 2016, the pretax income was $10,000, while the expected pretax income for the first quarter in 2017 is expected to be $20,000. Croatan is subject to a 30% income tax rate.
Required:
Prepare the results from discontinued operations section of Croatan's income statement for 2016, using good format. Show all computations.

Accepted Answer

The answer of On October 1, 2016, Croatan Corporation finalized...

Exam 5: The Income Statement and the Statement of Cash Flows Time Value of Money Module

An operating segment is a component of a company

Intraperiod tax allocation requires a corporation's total income tax expense to be allocated to all of the following except

Which of the following is required to be disclosed, pursuant to GAAP?

The following cash flows and other information pertain to Elon Company for 2016: Prepare the operating activities section of the statement of cash flows for 2016, using the direct method.

The primary purpose of a company's statement of cash flows is to provide information about the company's

List five purposes of the income statement.

The accounting profession has developed three alternatives for matching expenses: association of cause and effect, systematic and rational allocation, and immediate recognition. Discuss the conceptual merits of each alternative and give two examples for each expense matching alternative.

Differences that currently exist between IFRS and U.S. GAAP with regard to the presentation of information on the income statement include all of the following except

Which of the following is not considered part of comprehensive income?

Financial flexibility is generally defined as

Describe the major differences that still exist between the income statement information presentation requirements under IFRS and GAAP.

The following items involve the cash flow activities of Prizzie Company for 2016: Prepare the statement of cash flows of Prizzie Company for 2016 using the indirect method.

An operating segment is a component of a company that does all of the following except

The SEC scrutinizes reported earnings numbers to assess the quality of earnings and to detect any potential for earnings management.

Below are the Consolidated Statements of Earnings in part) for Starlights, Inc.

In distinguishing between revenues and gains, which of the following statements is false?

When a company classifies a component as held for sale, it must report the component on its balance sheet at the lower of its book value or its fair value minus costs to sell.