Question 1

Both U.S.GAAP and IFRS require the presentation of an income statement and the presentation of the items of Other Comprehensive Income.U.S.GAAP permits the following reporting format(s) except for:

Accepted Answer

A) a single statement of comprehensive income that shows all the changes in net assets except from transactions with owners. 
B) a two-statement presentation that includes an income statement and a separate statement of comprehensive income. 
C) a separate display of the items comprising Other Comprehensive Income within a statement of changes in shareholders' equity. 
D) a separate display of the items comprising Other Comprehensive Income within a statement of retained earnings. 
E) All of the above are acceptable reporting formats.

Question 2

U.S.GAAP and IFRS require firms in some instances to change the carrying value of certain assets and liabilities.Both sets of accounting standards preclude the recognition of these changes in net income, and therefore in retained earnings.

Accepted Answer

A) True 
 B)False

Question 3

Revenues measure the inflow of net assets from operating activities.

Accepted Answer

A) True 
 B)False

Question 4

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

Accepted Answer

A) salaries and commissions of the sales staff 
B) costs to produce catalogs 
C) marketing costs, such as advertising 
D) costs to produce sales literature 
E) direct labor

Question 5

What are common-size income statements?

Accepted Answer

The answer of What are common-size income statements?...

Question 6

Under the accrual method, the timing of revenue recognition is influenced by when the services or product are provided.

Accepted Answer

A) True 
 B)False

Question 7

What is revenue recognition?

Accepted Answer

The answer of What is revenue recognition?...

Question 8

Comprehensive income equals net income as reported on the income statement plus (minus) the increase (decrease) in other comprehensive income for the year.

Accepted Answer

A) True 
 B)False

Question 9

Which financial statement reports operating performance for a specific period of time?

Accepted Answer

A) Balance sheet 
B) Income statement 
C) Statement of changes in shareholders' equity 
D) Statement of retained earnings 
E) Statement of Cash Flows

Question 10

The income statement typically provides information about the operating results of business segments.

Accepted Answer

A) True 
 B)False

Question 11

As a general principle, under the accrual basis of accounting, the firm recognizes revenue when the transaction meets which of the following conditions?

Accepted Answer

A) completion of the earnings process, only 
B) receipt of assets from the customer, only 
C) completion of the earnings process and receipt of assets from the customer 
D) expiration of the warranty period, only 
E) receipt of the final payment, only

Question 12

_____ present an ordered list, grouped by broad categories of revenues and expenses.They begin with revenues followed by a list of expenses.

Accepted Answer

A) Income Statement 
B) Balance Sheets 
C) Statement of Retained Earnings 
D) Statement of Cash Flows 
E) None of the above

Question 13

Which of the following elements of financial statements is not a component of comprehensive income?

Accepted Answer

A) Revenues 
B) Expenses 
C) Losses 
D) Distributions to owners 
E) All of these are components of comprehensive income.

Question 14

How are expenses recognized and measured?

Accepted Answer

The answer of How are expenses recognized and measured?...

Question 15

Other comprehensive income for a reporting period include(s)

Accepted Answer

A) changes in the fair value of marketable equity securities available for sale. 
B) changes in the fair value of derivatives used as cash flow hedges. 
C) gains and losses related to retirement plans not yet recognized in measuring retirement benefits expense. 
D) all of the above 
E) none of the above

Question 16

Income statements prepared under U.S.GAAP contain which of the following sections or categories, depending on the nature of a firm's earnings for the period?

Accepted Answer

A) income from continuing operations 
B) income, gains, and losses from discontinued operations 
C) extraordinary gains and losses 
D) all of the above 
E) none of the above

Question 17

Both U.S.GAAP and IFRS require firms to report the cumulative effect of other comprehensive income in a balance sheet account called Accumulated

Accepted Answer

A) Comprehensive Income. 
B) Net Comprehensive Income. 
C) Other Comprehensive Income. 
D) Comprehensive Net Income. 
E) None of the above.

Question 18

Expenditures on advertising and research must be recognized as expense in the period of expenditure, regardless of the firm's expectation of future benefits.

Accepted Answer

A) True 
 B)False

Question 19

Which of the following concepts best characterizes the accrual basis of accounting?

Accepted Answer

A) Conservatism 
B) Matching 
C) Understandability 
D) Going concern 
E) Unit of measurement

Question 20

The income statement, also called the statement of financial position, provides information, at a point in time, on the firm's productive resources and the financing used to pay for those
resources.

Accepted Answer

A) True 
 B)False

Exam 5: Income Statement: Reporting Results of Operating Activities

Both U.S.GAAP and IFRS require the presentation of an income statement and the presentation of the items of Other Comprehensive Income.U.S.GAAP permits the following reporting format(s) except for:

U.S.GAAP and IFRS require firms in some instances to change the carrying value of certain assets and liabilities.Both sets of accounting standards preclude the recognition of these changes in net income, and therefore in retained earnings.

Revenues measure the inflow of net assets from operating activities.

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

What are common-size income statements?

Under the accrual method, the timing of revenue recognition is influenced by when the services or product are provided.

What is revenue recognition?

Comprehensive income equals net income as reported on the income statement plus (minus) the increase (decrease) in other comprehensive income for the year.

Which financial statement reports operating performance for a specific period of time?

The income statement typically provides information about the operating results of business segments.

As a general principle, under the accrual basis of accounting, the firm recognizes revenue when the transaction meets which of the following conditions?

_____ present an ordered list, grouped by broad categories of revenues and expenses.They begin with revenues followed by a list of expenses.

Which of the following elements of financial statements is not a component of comprehensive income?

How are expenses recognized and measured?

Other comprehensive income for a reporting period include(s)

Income statements prepared under U.S.GAAP contain which of the following sections or categories, depending on the nature of a firm's earnings for the period?

Both U.S.GAAP and IFRS require firms to report the cumulative effect of other comprehensive income in a balance sheet account called Accumulated

Expenditures on advertising and research must be recognized as expense in the period of expenditure, regardless of the firm's expectation of future benefits.

Which of the following concepts best characterizes the accrual basis of accounting?

The income statement, also called the statement of financial position, provides information, at a point in time, on the firm's productive resources and the financing used to pay for those resources.