Question 1

Which of the following items would be excluded from "core activities" as defined by the AICPA?

Accepted Answer

A) recurring nonoperating gains 
B) financing costs 
C) sales revenue 
D) sales commissions 
A) recurring nonoperating gains 
B) financing costs 
C) sales revenue 
D) sales commissions

Question 2

In distinguishing between revenues and gains, which of the following statements is not true?

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. 
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 3

Which will never result in an adjustment of a prior period's financial statements?

Accepted Answer

A) a material error 
B) a change in accounting principle 
C) a change in the estimated life of a depreciable asset 
D) the realization of income tax benefits of preacquisition operating loss carryforward of a purchased subsidiary 
A) a material error 
B) a change in accounting principle 
C) a change in the estimated life of a depreciable asset 
D) the realization of income tax benefits of preacquisition operating loss carryforward of a purchased subsidiary

Question 4

IFRS reporting requires all of the following items except

Accepted Answer

A) earnings per share disclosure 
B) comprehensive income disclosure in a statement of stockholders' equity 
C) disclosure of the results of discontinued operations 
D) operating expenses disclosure 
A) earnings per share disclosure 
B) comprehensive income disclosure in a statement of stockholders' equity 
C) disclosure of the results of discontinued operations 
D) operating expenses disclosure

Question 5

In an accrual-based transactional approach, net income is typically defined as

Accepted Answer

A) Revenues - Expenses + Gains + Losses 
B) Revenues - Expenses 
C) Revenues - Expenses + Gains - Losses 
D) increase in net assets from nonowner transactions 
A) Revenues - Expenses + Gains + Losses 
B) Revenues - Expenses 
C) Revenues - Expenses + Gains - Losses 
D) increase in net assets from nonowner transactions

Question 6

Match between columns
                        Premises: Merchandise inventory (beginning)
Cash dividends declared on common stock
Flood loss (infrequent and unusual)
Expenses incurred as a result of a strike
Discount on bonds payable
Correction of erroneous overstatement of last year's ending inventory
Loss from write-off of a significant accounts receivable (frequent, not unusual)
Additional depreciation on office equipment resulting from decrease in estimated useful life
Interest expense
Transportation-in

Accepted Answer

The Answer of Sales revenue (net) and Cost of goods is...

Question 7

Which of the following is not an acceptable way of reporting a company's comprehensive income?

Accepted Answer

A) on the face of the income statement 
B) in a separate statement of comprehensive income 
C) in the statement of changes in stockholders' equity 
D) in the statement of retained earnings 
A) on the face of the income statement 
B) in a separate statement of comprehensive income 
C) in the statement of changes in stockholders' equity 
D) in the statement of retained earnings

Question 8

Under which of the following conditions would frost damage be considered an extraordinary item for income reporting purposes?

Accepted Answer

A) only if frosts in the geographical area are unusual in nature and occur infrequently 
B) only if frosts are normal in the geographical area but do not occur frequently 
C) only if frosts occur frequently in the geographical area but can be covered by insurance policies 
D) under any circumstances frost damage should be classified as an extraordinary item 
A) only if frosts in the geographical area are unusual in nature and occur infrequently 
B) only if frosts are normal in the geographical area but do not occur frequently 
C) only if frosts occur frequently in the geographical area but can be covered by insurance policies 
D) under any circumstances frost damage should be classified as an extraordinary item

Question 9

Tate Corporation sold Division X (a business component).It was determined that the pretax loss from the operations of Division X during the year totaled $10, 000 and that a pretax gain of $20, 000 was realized on the sale of the division.The tax rate is 30%.
Required:
In good form, prepare the appropriate section of the income statement.

Accepted Answer

None

Question 10

When an entity reports on a sale of a component of the business

Accepted Answer

A) any income or loss from operations of the component should be reported in the income from continuing operations section, but any gain or loss on the sale of the component should be presented below the income from continuing operations section 
B) current operating income or loss of the component and any gain or loss on sale of the component should be presented in a separate section of the income statement 
C) any gain or loss on the sale should always be presented in the extraordinary gain or loss section of the income statement 
D) all information related to the sold component should be reported solely in the footnotes accompanying the financial statements 
A) any income or loss from operations of the component should be reported in the income from continuing operations section, but any gain or loss on the sale of the component should be presented below the income from continuing operations section 
B) current operating income or loss of the component and any gain or loss on sale of the component should be presented in a separate section of the income statement 
C) any gain or loss on the sale should always be presented in the extraordinary gain or loss section of the income statement 
D) all information related to the sold component should be reported solely in the footnotes accompanying the financial statements

Question 11

Realization of revenue occurs when

Accepted Answer

A) the item is formally recorded and reported in the financial statements 
B) noncash resources are converted into cash or rights to cash 
C) the actual exchange of noncash resources into cash 
D) when a transaction is both realized and realizable 
A) the item is formally recorded and reported in the financial statements 
B) noncash resources are converted into cash or rights to cash 
C) the actual exchange of noncash resources into cash 
D) when a transaction is both realized and realizable

Question 12

Comprehensive income would include which of the following? $\begin{array}{ll}&\text { Net Income }&\text { Distributions to Owners }\
I.&\text { No } & \text { No } \
II.&\text { No } & \text { Yes } \
III.&\text { Yes } & \text { No } \
IV.&\text { Yes } & \text { Yee }
\end{array}$

Accepted Answer

A) I 
B) II 
C) III 
D) IV 
A) I 
B) II 
C) III 
D) IV

Question 13

Match between columns
                        Premises: Amortization
Sales commissions
Cost of goods sold
Administrative salaries
Allocation of prepaid insurance
Utilities
Product warranty costs
Depreciation
Transportation-out
Travel and entertainment

Accepted Answer

The Answer of association of cause and effect and systematic is...

Question 14

In 2010, the Damon Company had sales of $600, 000; cost of sales of $430, 000; interest expense of $12, 000; a gain on the sale of a component of $12, 000; and an extraordinary loss of $20, 000.For its income statement, Damon uses the single-step format and the all-inclusive concept.What was Damon's reported pretax income from continuing operations?

Accepted Answer

A) $150, 000 
B) $170, 000 
C) $158, 000 
D) $138, 000 
A) $150, 000 
B) $170, 000 
C) $158, 000 
D) $138, 000

Question 15

The statement of cash flows is least likely to help external users to assess

Accepted Answer

A) a company's ability to generate positive future cash flows 
B) the amount of a company's future accrual-based sales revenue 
C) a company's ability to meet its obligations and pay dividends 
D) a company's need for external financing 
A) a company's ability to generate positive future cash flows 
B) the amount of a company's future accrual-based sales revenue 
C) a company's ability to meet its obligations and pay dividends 
D) a company's need for external financing

Question 16

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

Accepted Answer

1.IFRS have no prescribed income stateme

Question 17

Garcia Company began 2010 with net assets of $80, 000.Net income calculated by using the capital maintenance concept was $21, 000.During 2010 owners contributed $26, 000 of new capital.By year-end, the net assets totaled $78, 000.Dividends to the owners during 2010 were

Accepted Answer

A) $49, 000 
B) $28, 000 
C) $23, 000 
D) $ 2, 000 
A) $49, 000 
B) $28, 000 
C) $23, 000 
D) $ 2, 000

Question 18

The following information relates to the Smith Company: $\begin{array}{ll}
2010 \text { cash dividend declared } & \$ 400 \
\text { Restated (adjusted) retained earnings, January 1, 2010 } & ? \
2010 \text { net income } & 480 \
\text { Error in 2009-Underst at ement of ending inventory, } \
\text { error found in 2010 }  & 150\
\text { Restated (adiusted) retained earnings, December 31, } 2010& 1,550
\end{array}$  What is the adjusted January 1, 2010, balance in retained earnings?

Accepted Answer

A) $1, 170 
B) $1, 320 
C) $1, 470 
D) $1, 630 
A) $1, 170 
B) $1, 320 
C) $1, 470 
D) $1, 630

Question 19

While some convergence has been achieved, IFRS still differs from U.S.GAAP in earnings per share measurement in all of the following ways except

Accepted Answer

A) the calculation of basic earnings per share 
B) the application of the treasury stock method 
C) treatment of contingently issuable shares 
D) treatment of contracts that may be settled in shares or cash 
A) the calculation of basic earnings per share 
B) the application of the treasury stock method 
C) treatment of contingently issuable shares 
D) treatment of contracts that may be settled in shares or cash

Question 20

In 2010, the Sykes Company wrote off a $100, 000 debt from a major customer, lost $1, 250, 000 when a foreign country devalued its currency, gained $2, 000, 000 when a manufacturing plant was destroyed by a flood, lost $500, 000 on the early retirement of its long-term bonds, and lost $75, 000 on the sale of stock from its investment portfolio.What amount of extraordinary items (before income taxes)will Sykes report in 2010?

Accepted Answer

A) $ 250, 000 
B) $ 175, 000 
C) $2, 000, 000 
D) $1, 425, 000 
A) $ 250, 000 
B) $ 175, 000 
C) $2, 000, 000 
D) $1, 425, 000

Which of the following items would be excluded from "core activities" as defined by the AICPA?

In distinguishing between revenues and gains, which of the following statements is not true?

Which will never result in an adjustment of a prior period's financial statements?

IFRS reporting requires all of the following items except

In an accrual-based transactional approach, net income is typically defined as

Which of the following is not an acceptable way of reporting a company's comprehensive income?

Under which of the following conditions would frost damage be considered an extraordinary item for income reporting purposes?

When an entity reports on a sale of a component of the business

Realization of revenue occurs when

Comprehensive income would include which of the following? Net Income Distributions to Owners I. No No II. No Yes III. Yes No IV. Yes Yee

The statement of cash flows is least likely to help external users to assess

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

Garcia Company began 2010 with net assets of $80, 000.Net income calculated by using the capital maintenance concept was $21, 000.During 2010 owners contributed $26, 000 of new capital.By year-end, the net assets totaled $78, 000.Dividends to the owners during 2010 were

While some convergence has been achieved, IFRS still differs from U.S.GAAP in earnings per share measurement in all of the following ways except

The Environment of Financial Reporting

Financial Reporting: Its Conceptual Framework

Review of a Companys Accounting System

The Balance Sheet and the Statement of Changes in Stockholders Equity

Additional Aspects of Financial Reporting and Financial Analysis

Cash and Receivables

Inventories: Cost Measurement and Flow Assumptions

Inventories: Special Valuation Issues

Property, Plant, and Equipment: Acquisition and Disposal

Depreciation and Depletion

Intangibles

Current Liabilities and Contingencies

Long-Term Liabilities and Receivables

Investments

Contributed Capital

Earnings Per Share and Retained Earnings

Income Recognition and Measurement of Net Assets

Accounting for Income Taxes

Accounting for Postemployment Benefits

Accounting for Leases

The Statement of Cash Flows

Accounting for Changes and Errors

Time Value of Money Module

Filters

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

Which of the following items would be excluded from "core activities" as defined by the AICPA?

In distinguishing between revenues and gains, which of the following statements is not true?

Which will never result in an adjustment of a prior period's financial statements?

IFRS reporting requires all of the following items except

In an accrual-based transactional approach, net income is typically defined as

Which of the following is not an acceptable way of reporting a company's comprehensive income?

Under which of the following conditions would frost damage be considered an extraordinary item for income reporting purposes?

When an entity reports on a sale of a component of the business

Realization of revenue occurs when

Comprehensive income would include which of the following? Net Income Distributions to Owners I. No No II. No Yes III. Yes No IV. Yes Yee

The statement of cash flows is least likely to help external users to assess

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

Garcia Company began 2010 with net assets of $80, 000.Net income calculated by using the capital maintenance concept was $21, 000.During 2010 owners contributed $26, 000 of new capital.By year-end, the net assets totaled $78, 000.Dividends to the owners during 2010 were

While some convergence has been achieved, IFRS still differs from U.S.GAAP in earnings per share measurement in all of the following ways except

The Environment of Financial Reporting

Financial Reporting: Its Conceptual Framework

Review of a Companys Accounting System

The Balance Sheet and the Statement of Changes in Stockholders Equity

Additional Aspects of Financial Reporting and Financial Analysis

Cash and Receivables

Inventories: Cost Measurement and Flow Assumptions

Inventories: Special Valuation Issues

Property, Plant, and Equipment: Acquisition and Disposal

Depreciation and Depletion

Intangibles

Current Liabilities and Contingencies

Long-Term Liabilities and Receivables

Investments

Contributed Capital

Earnings Per Share and Retained Earnings

Income Recognition and Measurement of Net Assets

Accounting for Income Taxes

Accounting for Postemployment Benefits

Accounting for Leases

The Statement of Cash Flows

Accounting for Changes and Errors

Time Value of Money Module

Filters