Question 1

It is the date of the declaration of dividends, not the date of dividend payment, that affects retained earnings and creates the liability.

Accepted Answer

A) True 
 B)False  True

Question 2

Accountants have not accepted the role of disclosing the firm's capacity to make distributions to stockholders.

Accepted Answer

A) True 
 B)False  True

Question 3

Which of the following is a recurring item?

Accepted Answer

A)  equity in earnings of nonconsolidated subsidiaries 
B)  error of a prior period 
C)  discontinued operations 
D)  extraordinary gain 
E)  cumulative effect of change in accounting principle 
A)  equity in earnings of nonconsolidated subsidiaries 
B)  error of a prior period 
C)  discontinued operations 
D)  extraordinary gain 
E)  cumulative effect of change in accounting principle A

Question 4

Gross profit is the difference between:

Accepted Answer

A)  net income and operating income 
B)  revenues and expenses 
C)  sales and cost of goods sold 
D)  income from continuing operations and discontinued operations 
E)  gross sales and sales discounts 
A)  net income and operating income 
B)  revenues and expenses 
C)  sales and cost of goods sold 
D)  income from continuing operations and discontinued operations 
E)  gross sales and sales discounts

Question 5

If the disposal of a segment meets the criteria of a disposal of a segment, then:

Accepted Answer

A)  the loss on disposal is an extraordinary item 
B)  the loss on disposal is categorized as "other expense" 
C)  the results of operations of the segment will be reported in conjunction with the gain or loss on disposal 
D)  the disposal qualifies as a change in entity, and prior years' statements presented on comparative purposes must be restated 
E)  the effects of the disposal are shown as part of operations 
A)  the loss on disposal is an extraordinary item 
B)  the loss on disposal is categorized as "other expense" 
C)  the results of operations of the segment will be reported in conjunction with the gain or loss on disposal 
D)  the disposal qualifies as a change in entity, and prior years' statements presented on comparative purposes must be restated 
E)  the effects of the disposal are shown as part of operations

Question 6

Which of the following is not a category within accumulated other comprehensive income?

Accepted Answer

A)  post retirement commitments on health plans 
B)  foreign currency translation adjustments 
C)  unrealized holding gains and losses on available-for-sale marketable securities 
D)  changes to stockholders equity resulting from additional minimum pension liability adjustments 
E)  unrealized gains and losses from derivative instruments 
A)  post retirement commitments on health plans 
B)  foreign currency translation adjustments 
C)  unrealized holding gains and losses on available-for-sale marketable securities 
D)  changes to stockholders equity resulting from additional minimum pension liability adjustments 
E)  unrealized gains and losses from derivative instruments

Question 7

An income statement is a summary of revenues and expenses and gains and losses, ending with net income for a particular period of time.

Accepted Answer

A) True 
 B)False

Question 8

In practice, the income statement is frequently considered to be the least important financial statement.

Accepted Answer

A) True 
 B)False

Question 9

Equity earnings can distort the reported results of a business's operations.

Accepted Answer

A) True 
 B)False

Question 10

Comprehensive income is net income plus the periods change in accumulated other comprehensive income.

Accepted Answer

A) True 
 B)False

Question 11

Ideally, income from continuing operations would be the better income figure to use to project the future from the analysis of historical statements.

Accepted Answer

A) True 
 B)False

Question 12

When a company discontinues and disposes of a component segment of its operations, the gain or loss from disposal should be reported as:

Accepted Answer

A)  an adjustment to retained earnings 
B)  a sale of fixed assets in "other" expense 
C)  an extraordinary item 
D)  an accounting change 
E)  a special item after continuing operations and before extraordinary items 
A)  an adjustment to retained earnings 
B)  a sale of fixed assets in "other" expense 
C)  an extraordinary item 
D)  an accounting change 
E)  a special item after continuing operations and before extraordinary items

Question 13

Under IFRS, equipment may be revalved.

Accepted Answer

A) True 
 B)False

Question 14

If a firm consolidates subsidiaries that are not wholly owned, an income statement item is created that is termed:

Accepted Answer

A)  dividend income 
B)  minority share of earnings 
C)  equity income 
D)  extraordinary 
E)  gain from sale of subsidiary 
A)  dividend income 
B)  minority share of earnings 
C)  equity income 
D)  extraordinary 
E)  gain from sale of subsidiary

Question 15

Which of the following would be classified as an extraordinary item on the income statement?

Accepted Answer

A)  loss on disposal of a segment of business 
B)  cumulative effect of a change in accounting principle 
C)  a sale of land 
D)  an error correction that relates to a prior year 
E)  a loss from a flood in a location that would not be expected to flood 
A)  loss on disposal of a segment of business 
B)  cumulative effect of a change in accounting principle 
C)  a sale of land 
D)  an error correction that relates to a prior year 
E)  a loss from a flood in a location that would not be expected to flood

Question 16

The legality of distributions to stockholders is governed by federal law.

Accepted Answer

A) True 
 B)False

Question 17

The following relate to Data Original in 2010.What is the ending inventory?
Purchases
$540,000
Beginning Inventory
80,000
Purchase Returns
10,000
Sales
800,000
Cost of Goods Sold
490,000

Accepted Answer

A)  $120,000 
B)  $140,000 
C)  $210,000 
D)  $260,000 
E)  none of the answers are correct 
A)  $120,000 
B)  $140,000 
C)  $210,000 
D)  $260,000 
E)  none of the answers are correct

Question 18

If Investor Company owns 20% of the stock of Investee Company and Investee Company reports profits of $100,000, then Investor Company reports equity income of:

Accepted Answer

A)  $80,000 
B)  $20,000 
C)  $40,000 
D)  $60,000 
E)  none of the answers are correct 
A)  $80,000 
B)  $20,000 
C)  $40,000 
D)  $60,000 
E)  none of the answers are correct

Question 19

Retained earnings, an account on the balance sheet, represents the undistributed earnings of the corporation.

Accepted Answer

A) True 
 B)False

Question 20

Presenting an item after tax, with the related tax deducted, is called net-of-tax presentation.

Accepted Answer

A) True 
 B)False

It is the date of the declaration of dividends, not the date of dividend payment, that affects retained earnings and creates the liability.

Accountants have not accepted the role of disclosing the firm's capacity to make distributions to stockholders.

Which of the following is a recurring item?

Gross profit is the difference between:

If the disposal of a segment meets the criteria of a disposal of a segment, then:

Which of the following is not a category within accumulated other comprehensive income?

An income statement is a summary of revenues and expenses and gains and losses, ending with net income for a particular period of time.

In practice, the income statement is frequently considered to be the least important financial statement.

Equity earnings can distort the reported results of a business's operations.

Comprehensive income is net income plus the periods change in accumulated other comprehensive income.

Ideally, income from continuing operations would be the better income figure to use to project the future from the analysis of historical statements.

When a company discontinues and disposes of a component segment of its operations, the gain or loss from disposal should be reported as:

Under IFRS, equipment may be revalved.

If a firm consolidates subsidiaries that are not wholly owned, an income statement item is created that is termed:

Which of the following would be classified as an extraordinary item on the income statement?

The legality of distributions to stockholders is governed by federal law.

The following relate to Data Original in 2010.What is the ending inventory? Purchases $540,000 Beginning Inventory 80,000 Purchase Returns 10,000 Sales 800,000 Cost of Goods Sold 490,000

If Investor Company owns 20% of the stock of Investee Company and Investee Company reports profits of $100,000, then Investor Company reports equity income of:

Retained earnings, an account on the balance sheet, represents the undistributed earnings of the corporation.

Presenting an item after tax, with the related tax deducted, is called net-of-tax presentation.

Introduction to Financial Reporting

Introduction to Financial Statements and Other Financial Reporting Topics

Balance Sheet

Basics of Analysis

Liquidity of Short-Term Assets; Related Debt-Paying Ability

Long-Term Debt-Paying Ability

Profitability

For the Investor

Statement of Cash Flows

Expanded Analysis

Special Industries: Banks, Utilities, Oil and Gas, Transportation, Insurance, Real Estate Companies

Personal Financial Statements and Accounting for Governments and Not-For-Profit Organizations

Filters

Exam 4: Income Statement

It is the date of the declaration of dividends, not the date of dividend payment, that affects retained earnings and creates the liability.

Accountants have not accepted the role of disclosing the firm's capacity to make distributions to stockholders.

Which of the following is a recurring item?

Gross profit is the difference between:

If the disposal of a segment meets the criteria of a disposal of a segment, then:

Which of the following is not a category within accumulated other comprehensive income?

An income statement is a summary of revenues and expenses and gains and losses, ending with net income for a particular period of time.

In practice, the income statement is frequently considered to be the least important financial statement.

Equity earnings can distort the reported results of a business's operations.

Comprehensive income is net income plus the periods change in accumulated other comprehensive income.

Ideally, income from continuing operations would be the better income figure to use to project the future from the analysis of historical statements.

When a company discontinues and disposes of a component segment of its operations, the gain or loss from disposal should be reported as:

Under IFRS, equipment may be revalved.

If a firm consolidates subsidiaries that are not wholly owned, an income statement item is created that is termed:

Which of the following would be classified as an extraordinary item on the income statement?

The legality of distributions to stockholders is governed by federal law.

The following relate to Data Original in 2010.What is the ending inventory? Purchases $540,000 Beginning Inventory 80,000 Purchase Returns 10,000 Sales 800,000 Cost of Goods Sold 490,000

If Investor Company owns 20% of the stock of Investee Company and Investee Company reports profits of $100,000, then Investor Company reports equity income of:

Retained earnings, an account on the balance sheet, represents the undistributed earnings of the corporation.

Presenting an item after tax, with the related tax deducted, is called net-of-tax presentation.

Introduction to Financial Reporting

Introduction to Financial Statements and Other Financial Reporting Topics

Balance Sheet

Basics of Analysis

Liquidity of Short-Term Assets; Related Debt-Paying Ability

Long-Term Debt-Paying Ability

Profitability

For the Investor

Statement of Cash Flows

Expanded Analysis

Special Industries: Banks, Utilities, Oil and Gas, Transportation, Insurance, Real Estate Companies

Personal Financial Statements and Accounting for Governments and Not-For-Profit Organizations

Filters