Exam 4: Income Statement

Changes in account balances of Multi-Plus Inc.during 2012 were: Assets \ 420,000 Liabilities 125,000 Capital Stock 100,000 Additional Paid-In Capital 140,000 Retained Earnings ? Assuming that there were no charges to retained earnings other than dividends of $62,000,the net income for 2010 was:

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

Which of the following is not true about a stock dividend?

Which of the following would be included in operating income?

Oregm Imports engages in the retail sale of household products and clothing.During 2012,the company disposed of the clothing segment.Oregm Imports had 150,000 shares of stock outstanding all year.The results of operations for 2012 follow. Net sales Cost of goods sold Operating expenses Loss on disposal of clothing business (before income tax effect) Interest expense Extraordinary loss from expropriation of operations in foreign country (before income tax effect) Household \ 15,000,000 11,400,000 1,400,000 40,000 80,000 \ 3,900,000 3,500,000 300,000 680,000 Income taxes of 40% apply to all items.Required: Prepare a multiple-step income statement for the year ended December 31,2012,in good format.

Gross profit is the difference between:

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

Noncontrolling interest relects income from ownership of noncontrolling shareholders in the equity of consolidated subsidaries less than wholly owned.

Other income and other expense are categories under which secondary activities of the firm not directly related to the operations are classified.

The accounting standard provides considerable flexibility in reporting comprehensive income.

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

Gross profit will be a prominent figure on a single-step income statement.

In analysis of income,for purposes of determining a trend,extraordinary items should be included.

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

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

With a stock dividend,total market value considering all outstanding shares should decline.

The income statement for Lifeline Products in single-step format follows. Lifeline Products Income Statement For the Year Ended December 31, 2012 Revenues: Sales Rent Income Costs and Expenses: Cost of Sales Selling and Administrative Expenses Interest Expense Loss on the Sale of Plant Assets Income Before Taxes Income Taxes Net Income Earnings per Share \ 3,000,000 \ 3,014,000 2,370,000 322,000 48,000 Required: a.Convert the statement to multiple-step format. b.Recompute net income with the unusual loss removed. c.Why may net income with the unusual loss removed be preferable to use for trend analysis? d.Speculate on why this loss is not considered extraordinary or as a disposal of a segment.

Which of the following items on the income statement is not disclosed net of tax?

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

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: