Exam 5: The Income Statement and the Statement of Cash Flows

The following information relates to the Pierce Company (in thousands): Additional investment by Mr. Pierce \5 Sales revenue 150 Net assets, begiming of year 100 Distribution to Mr. Pierce 10 Cost of goods sold 125 Net assets, end of year 180 Required: Compute net income, using the financial capital maintenance approach.

The information content of a statement of retained earnings would be increased if

All of the information required in the computation of cost of goods sold is presented below, except for purchases, which must be what amount? Purchase discounts \ 200 Inventory, December 31 1,500 Cost of goods sold 9,500 Purchases ? Inventory, January 1 1,500 Freight-in 500

For income reporting purposes, items can appear in any of the following components of the income statement, retained earnings statement, and related schedules and footnotes: Several items of accounting information are listed below: Required: By placing the letters (a-f)in the spaces provided above, identify where the information would be most appropriately reported.If the information would not appear in any of the above components, place an (X)in the space.

Comprehensive income includes the following changes in equity in a company during a period except

Which of the following statements best defines the transactional approach?

Which of the following statements concerning the sale of a business component is true?

A company is justified in changing from one generally accepted accounting principle to another generally accepted accounting principle only if

Which of the following best describes the characteristics that relate to 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.

Which of the following expenses is an example of expense recognition under the immediate recognition principle?

The comparison of the beginning and ending capital (net assets)after adjusting for any additional investments or disinvestment during the period, and indicating the difference to be corporate income, is termed the

What income measurement approach is identified by the following equation? Net income = Net assets at the end of the year - Net assets at the beginning of the year - Additional investment by owners + Distributions to owners

All of the following are included in the computation of cost of goods sold except

How should a material, infrequent event not meeting the criteria for an extraordinary item be disclosed in the income statement?

The following information relates to the Zhang Corporation (in thousands): Sales revenue \9 0 Net assets, end of year 70 Net income, capital maintenance method 25 Additional investment by stockholders 15 Net assets beginining of year 35 Required: Compute the amount of dividends paid during the year, using the financial capital maintenance approach.

From the following information, compute cost of goods sold. Purchase returns \ 200 Inventory, December 31 1,500 Freight-in 100 Inventory, January 1 1,800 Purchases 5,000

Which of the following is not required to be disclosed, pursuant to GAAP?

Which of the following is a required disclosure in the income statement when reporting the sale of a component of the business?

Below is a list of financial statement components with a corresponding letter code. Required: Indicate where each component would be reported in the financial statements by inserting the corresponding code letters in the space provided.