Question 1

Other Comprehensive Income is reported on the:

Accepted Answer

A) income statement. 
B) statement of comprehensive income. 
C) statement of retained earnings. 
D) balance sheet.

Question 2

If net sales are $1,200,000 and cost of goods sold is $300,000,gross profit is $900,000.

Accepted Answer

A) True 
 B)False

Question 3

The Foreign-Currency Transaction Gain account holds gains and losses on transactions settled in a foreign currency.

Accepted Answer

A) True 
 B)False

Question 4

Padowski Corporation's net income for the current year is $500,000.At year end,the corporation had outstanding 4,500 shares of 15%,$100 par value nonconvertible preferred stock and 15,000 shares of $10 par value common stock.No shares were issued or retired during the year.What is basic earnings per share?

Accepted Answer

A) $22.18 
B) $25.64 
C) $28.83 
D) $33.33

Question 5

When a U.S.-based company has a payable denominated in a foreign currency,the U.S.company wants the foreign currency to ________ and the U.S.dollar to _________.

Accepted Answer

A) strengthen; strengthen 
B) strengthen; weaken 
C) weaken; strengthen 
D) weaken; weaken

Question 6

Income tax payable appears on the:

Accepted Answer

A) statement of retained earnings. 
B) statement of stockholders' equity. 
C) income statement. 
D) balance sheet.

Question 7

It is management's responsibility to issue a report on internal control.

Accepted Answer

A) True 
 B)False

Question 8

Income tax payable is computed by multiplying income before income taxes per the income statement by the income tax rate.

Accepted Answer

A) True 
 B)False

Question 9

The Brankov Tool and Die Company reports the following for the fiscal year ended December 31,2014:  What is comprehensive income for the year ended December 31,2014?

Accepted Answer

A) $1,092,500 
B) $1,104,500 
C) $1,149,500 
D) $1,155,000

Question 10

Prepare a multiple-step income statement for Sterner Corporation for the year ending December 31,2015.The tax rate for Sterner Corporation is 30%.The following information is available:

Accepted Answer

The answer of Prepare a multiple-step income statement for Sterner...

Question 11

When a company discontinues a segment of its business,the income statement should report income (loss)from continuing operations and income (loss)from discontinued operations.

Accepted Answer

A) True 
 B)False

Question 12

On August 1,Steffen Computers,Inc.purchased thirty computer chips,on account,from a company located in Taiwan for 500,000 Taiwan dollars.On that date the Taiwan dollar is worth $0.040.On September 1,when the Taiwan dollar was worth $0.038,payment was made.The journal entry on September 1 by Steffen Computers,Inc.would include a:

Accepted Answer

A) debit to Accounts Payable $19,000. 
B) debit to Foreign-Currency Transaction Loss $1,000. 
C) credit to Foreign-Currency Transaction Gain $1,000. 
D) credit to Cash $20,000.

Question 13

Publicly-traded companies have the option to have the financial statements audited.

Accepted Answer

A) True 
 B)False

Question 14

Which of the following line items are reported net of tax on the income statement?

Accepted Answer

A) operating loss of discontinued operations 
B) loss on sale of discontinued segment 
C) extraordinary loss due to flood damage in factory in Phoenix,Arizona 
D) all of the above

Question 15

A sign(s)of increasing earnings quality is(are):

Accepted Answer

A) improving gross margin to sales ratio. 
B) declining operating expenses to sales ratio. 
C) improving operating income to sales ratio. 
D) all of the above.

Question 16

The formula to determine income tax payable is:

Accepted Answer

A) taxable income (from the income tax return)multiplied by the income tax rate. 
B) taxable income(from the income statement)multiplied by the income tax rate. 
C) income before income tax expense (from the tax return)multiplied by the income tax rate. 
D) income before income tax expense (from the income statement)multiplied by the income tax rate.

Question 17

The loss from discontinued operations includes:

Accepted Answer

A) operating loss of discontinued segment during divestiture period. 
B) loss on sale of discontinued segment. 
C) unusual and infrequent losses. 
D) A and B.

Question 18

Footnotes about a company's segments are useful because the notes reveal:

Accepted Answer

A) the different types of business activities and the different economic environments. 
B) the company's internal controls over financial reporting. 
C) the company's blueprint for competitive advantage. 
D) the outside auditor's audit report.

Question 19

Western Corporation has taxable income of $390,000 and pretax accounting income of $363,000.The company's income tax rate is 30%.The journal entry to record the income tax includes a:

Accepted Answer

A) debit to Income Tax Expense $117,000. 
B) credit to Deferred Tax Asset $8,100. 
C) debit to Deferred Tax Asset $8,100. 
D) credit to Income Tax Payable $108,900.

Question 20

A U.S.-based company sells merchandise on account to a company in Mexico.The Mexican company wants to pay for the merchandise in pesos.If the peso decreases in value relative to the dollar,the seller will record a ________.We say the peso ________ relative to the dollar.

Accepted Answer

A) Foreign Currency Transaction Gain; weakens 
B) Foreign Currency Transaction Gain; strengthens 
C) Foreign Currency Transaction Loss; weakens 
D) Foreign Currency Transaction Loss; strengthens

Exam 11: Evaluating Performance: Earnings Quality, the Income Statement, the Statement of Comprehensive Income

Other Comprehensive Income is reported on the:

If net sales are $1,200,000 and cost of goods sold is $300,000,gross profit is $900,000.

The Foreign-Currency Transaction Gain account holds gains and losses on transactions settled in a foreign currency.

When a U.S.-based company has a payable denominated in a foreign currency,the U.S.company wants the foreign currency to and the U.S.dollar to _.

Income tax payable appears on the:

It is management's responsibility to issue a report on internal control.

Income tax payable is computed by multiplying income before income taxes per the income statement by the income tax rate.

The Brankov Tool and Die Company reports the following for the fiscal year ended December 31,2014: What is comprehensive income for the year ended December 31,2014?

Prepare a multiple-step income statement for Sterner Corporation for the year ending December 31,2015.The tax rate for Sterner Corporation is 30%.The following information is available:

When a company discontinues a segment of its business,the income statement should report income (loss)from continuing operations and income (loss)from discontinued operations.

Publicly-traded companies have the option to have the financial statements audited.

Which of the following line items are reported net of tax on the income statement?

A sign(s) of increasing earnings quality is(are) :

The formula to determine income tax payable is:

The loss from discontinued operations includes:

Footnotes about a company's segments are useful because the notes reveal:

Western Corporation has taxable income of $390,000 and pretax accounting income of $363,000.The company's income tax rate is 30%.The journal entry to record the income tax includes a:

A U.S.-based company sells merchandise on account to a company in Mexico.The Mexican company wants to pay for the merchandise in pesos.If the peso decreases in value relative to the dollar,the seller will record a .We say the peso relative to the dollar.