Question 1

An example of direct matching of an expense with revenues would be

Accepted Answer

A) depreciation expense. 
B) office salaries expense. 
C) direct labor costs incurred to produce inventory sold during a period. 
D) advertising expense. 
A) depreciation expense. 
B) office salaries expense. 
C) direct labor costs incurred to produce inventory sold during a period. 
D) advertising expense.

Question 2

The following amounts are from Silverton Co.'s 2014 income statement:
 
What amount would Silverton show for income from continuing operations on a multiple-step format income statement?

Accepted Answer

A) $52,000 
B) $68,000 
C) $57,000 
D) $96,000 
A) $52,000 
B) $68,000 
C) $57,000 
D) $96,000

Question 3

Costs that can be reasonably associated with specific revenues but NOT with specific products should be

Accepted Answer

A) charged to expense in the period incurred. 
B) allocated to specific products based on the best estimate of the production processing time. 
C) expensed in the period in which the related revenue is recognized. 
D) capitalized and then amortized over a period not to exceed 60 months. 
A) charged to expense in the period incurred. 
B) allocated to specific products based on the best estimate of the production processing time. 
C) expensed in the period in which the related revenue is recognized. 
D) capitalized and then amortized over a period not to exceed 60 months.

Question 4

Stratosphere Manufacturing Company sold plant assets at a gain of $205,000 less related taxes of $62,500.Assuming the gain is not considered unusual or infrequent,Stratosphere's income statement for the period should report

Accepted Answer

A) a prior period adjustment net of applicable taxes, $142,500. 
B) an extraordinary item net of applicable taxes, $142,500. 
C) a gain of $205,000 and an increase in income tax expense of $62,500. 
D) operating income net of applicable taxes, $142,500. 
A) a prior period adjustment net of applicable taxes, $142,500. 
B) an extraordinary item net of applicable taxes, $142,500. 
C) a gain of $205,000 and an increase in income tax expense of $62,500. 
D) operating income net of applicable taxes, $142,500.

Question 5

A single-step income statement is a format that

Accepted Answer

A) compares the current year's income with last year's income. 
B) recognizes subtotals at intermediate stages such as gross margin. 
C) combines revenues and gains and subtracts from them expenses and losses, resulting in income from operations. 
D) reports sales revenue, cost of goods sold, gross margin, and all other expenses. 
A) compares the current year's income with last year's income. 
B) recognizes subtotals at intermediate stages such as gross margin. 
C) combines revenues and gains and subtracts from them expenses and losses, resulting in income from operations. 
D) reports sales revenue, cost of goods sold, gross margin, and all other expenses.

Question 6

In contrast with a multiple-step income statement,a single-step income statement does not show the amount of

Accepted Answer

A) income taxes on continuing operations. 
B) cost of goods sold. 
C) gross profit. 
D) earnings per share. 
A) income taxes on continuing operations. 
B) cost of goods sold. 
C) gross profit. 
D) earnings per share.

Question 7

All of the following components are shown in the income statement net of applicable income taxes EXCEPT

Accepted Answer

A) discontinued operations. 
B) cumulative effect of a change in accounting principle. 
C) gain or loss on sale of plant assets. 
D) extraordinary gain or loss. 
A) discontinued operations. 
B) cumulative effect of a change in accounting principle. 
C) gain or loss on sale of plant assets. 
D) extraordinary gain or loss.

Question 8

On a multiple-step income statement,gains or losses on sale of equipment would be shown

Accepted Answer

A) before gross profit on sales. 
B) after gross profit on sales but before income from continuing operations. 
C) after income from continuing operations but before income from extraordinary items. 
D) after income before extraordinary items but before net income. 
A) before gross profit on sales. 
B) after gross profit on sales but before income from continuing operations. 
C) after income from continuing operations but before income from extraordinary items. 
D) after income before extraordinary items but before net income.

Question 9

Which of the following categories of expenses is subject to immediate recognition on the income statement?

Accepted Answer

A) Repairs and maintenance expense incurred on production equipment of a manufacturer 
B) The salary of the company president 
C) The salary of the production foreman 
D) Utilities expense for the production line of a manufacturer 
A) Repairs and maintenance expense incurred on production equipment of a manufacturer 
B) The salary of the company president 
C) The salary of the production foreman 
D) Utilities expense for the production line of a manufacturer

Question 10

Starship Corporation incurred the following losses during 2014:
•Loss of $100,000 was incurred in the abandonment of equipment.
•Accounts receivable of $30,000 were written off as uncollectible.
•Several factories were shut down during a strike at a cost of $240,000.
•Loss of $150,000 was sustained as a result of flood damage,an unusual and infrequent occurrence.
Ignoring income taxes,what amount of loss should Starship report as extraordinary on its annual income statement?

Accepted Answer

A) $100,000 
B) $520,000 
C) $270,000 
D) $150,000 
A) $100,000 
B) $520,000 
C) $270,000 
D) $150,000

Question 11

The following information is available for Superior Company for 2014:
 
What amount should Superior report as cost of goods sold for 2014?

Accepted Answer

A) $510,000 
B) $550,000 
C) $610,000 
D) $650,000 
A) $510,000 
B) $550,000 
C) $610,000 
D) $650,000

Question 12

Which of the following would be treated as an extraordinary item?

Accepted Answer

A) Expropriation of an entity's operations in a foreign country 
B) The write-down of inventory due to obsolescence 
C) A loss resulting from a strike by workers against an entity 
D) The write-off of accounts receivable not expected to be collected 
A) Expropriation of an entity's operations in a foreign country 
B) The write-down of inventory due to obsolescence 
C) A loss resulting from a strike by workers against an entity 
D) The write-off of accounts receivable not expected to be collected

Question 13

The Sutton Forest Products Company had sales during 2014 of $1,200,000.Sutton operates at a gross profit of 50%.Purchases of inventory during 2014 totaled $675,000 and ending inventory totaled $210,500.Selling expenses were 20% of sales and general and administrative expenses were 75% of the selling expenses.Sutton's tax rate is 40% and the company has 50,000 shares of common stock outstanding.
Prepare an income statement for Sutton Forest Products,including earnings per share data,for the year ended December 31,2014

Accepted Answer

@#IMG-DLM& Cost of Goods Sold = $1,200,000 × .5 =

Question 14

Astro Incorporated's financial statements for the years 2014 and 2015 contained the following errors:
 
Assuming that none of the errors were detected or corrected,and that no additional errors were made in 2016,by what amount will current assets at December 31,2016,be overstated or understated?

Accepted Answer

A) $0 
B) $3,000 overstated 
C) $9,000 understated 
D) $9,000 overstated 
A) $0 
B) $3,000 overstated 
C) $9,000 understated 
D) $9,000 overstated

Question 15

All of the following represent the likely options for financing business expansion except

Accepted Answer

A) sale of preferred stock. 
B) sale of common stock. 
C) internal financing through use of retained earnings. 
D) an unrealized gain on available-for-sale securities. 
A) sale of preferred stock. 
B) sale of common stock. 
C) internal financing through use of retained earnings. 
D) an unrealized gain on available-for-sale securities.

Question 16

Mayordomo,Inc.,has several operating divisions.In September 2014,the management of Mayordomo decided on a formal plan to sell one of its divisions.This division is considered a separate component as defined by SFAS No.144.
The sale was completed on December 10,2014,at which time the division was sold for $800,000.The book value of the assets of the division was $1,000,000.The before-tax operating loss of the division for the period January 1,2014 to the date of disposal was $130,000.The company's tax rate is 40%.The after-tax income from continuing operations for 2014 was $350,000.
Prepare a partial income statement for 2014 beginning with income from continuing operations.Ignore EPS disclosures.

Accepted Answer

The answer of Mayordomo,Inc.,has several operating divisions.In September 2014,the management...

Question 17

When a business segment is discontinued during the year,the gain or loss on disposal

Accepted Answer

A) is reported as an extraordinary item. 
B) should include only the loss or income from operating the discontinued segment for the current period. 
C) excludes only the gain or loss on disposal of the segment. 
D) should be shown net of applicable income taxes. 
A) is reported as an extraordinary item. 
B) should include only the loss or income from operating the discontinued segment for the current period. 
C) excludes only the gain or loss on disposal of the segment. 
D) should be shown net of applicable income taxes.

Question 18

The following data are available from the records of Mandarin,Inc.:
   
Prepare a single-step income statement and a retained earnings statement for Mandarin,Inc.for the year ended December 31,2014.

Accepted Answer

The answer of The following data are available from the...

Question 19

Which of the following is true?
The results of operations of a component of an entity that either has been disposed of or classified as held for sale shall be reported in discontinued operations if:
I.The operations and cash flows of the component have been or will be eliminated from the ongoing operations of the entity as a result of the disposal transaction.
II.The entity continues to have a significant continuing involvement in the operations of the component after the disposal transaction.
III.The entity outsources the manufacturing operations of a component and sells the manufacturing facility of the component but continues to sell the product formerly manufactured by the facility sold.

Accepted Answer

A) I, II, and III are all true. 
B) I and II are true, but III is not. 
C) Only II is true. 
D) Only I is true. 
A) I, II, and III are all true. 
B) I and II are true, but III is not. 
C) Only II is true. 
D) Only I is true.

Question 20

Cultivo Corporation's capital stock at December 31 consisted of the following:
(a)Common stock,$2 par value; 100,000 shares authorized,issued,and outstanding.
(b)10% noncumulative,nonconvertible preferred stock,$100 par value; 1,000 shares authorized,issued,and outstanding.
Cultivo's common stock,which is listed on a major stock exchange,was quoted at $4 per share on December 31.Cultivo's net income for the year ended December 31 was $50,000.The yearly preferred dividend was declared.No capital stock transactions occurred.What was the price earnings ratio on Cultivo's common stock at December 31?

Accepted Answer

A) 6 to 1 
B) 8 to 1 
C) 10 to 1 
D) 16 to 1 
A) 6 to 1 
B) 8 to 1 
C) 10 to 1 
D) 16 to 1

An example of direct matching of an expense with revenues would be

The following amounts are from Silverton Co.'s 2014 income statement: What amount would Silverton show for income from continuing operations on a multiple-step format income statement?

Costs that can be reasonably associated with specific revenues but NOT with specific products should be

Stratosphere Manufacturing Company sold plant assets at a gain of $205,000 less related taxes of $62,500.Assuming the gain is not considered unusual or infrequent,Stratosphere's income statement for the period should report

A single-step income statement is a format that

In contrast with a multiple-step income statement,a single-step income statement does not show the amount of

All of the following components are shown in the income statement net of applicable income taxes EXCEPT

On a multiple-step income statement,gains or losses on sale of equipment would be shown

Which of the following categories of expenses is subject to immediate recognition on the income statement?

The following information is available for Superior Company for 2014: What amount should Superior report as cost of goods sold for 2014?

Which of the following would be treated as an extraordinary item?

Astro Incorporated's financial statements for the years 2014 and 2015 contained the following errors: Assuming that none of the errors were detected or corrected,and that no additional errors were made in 2016,by what amount will current assets at December 31,2016,be overstated or understated?

All of the following represent the likely options for financing business expansion except

When a business segment is discontinued during the year,the gain or loss on disposal

The following data are available from the records of Mandarin,Inc.: Prepare a single-step income statement and a retained earnings statement for Mandarin,Inc.for the year ended December 31,2014.

Financial Reporting

A Review of the Accounting Cycle

The Balance Sheet and Notes to the Financial Statements

Statement of Cash Flows and Articulation

Earnings Management

The Revenuereceivablescash Cycle

Revenue Recognition

Inventory and Cost of Goods Sold

Investments in Noncurrent Operating Assets-Acquisition

Investments in Noncurrent Operating Assets-Utilization and Retirement

Debt Financing

Equity Financing

Investments in Debt and Equity Securities

Leases

Income Taxes

Employee Compensation-Payroll,pensions, Other Compissues

Earnings Per Share

Derivatives, contingencies, business Segments, and Interim Reports

Accounting Changes and Error Corrections

Statement of Cash Flows Revisited

Accounting in a Global Market

Analysis of Financial Statements

Filters

Exam 4: The Income Statement

An example of direct matching of an expense with revenues would be

The following amounts are from Silverton Co.'s 2014 income statement: What amount would Silverton show for income from continuing operations on a multiple-step format income statement?

Costs that can be reasonably associated with specific revenues but NOT with specific products should be

Stratosphere Manufacturing Company sold plant assets at a gain of $205,000 less related taxes of $62,500.Assuming the gain is not considered unusual or infrequent,Stratosphere's income statement for the period should report

A single-step income statement is a format that

In contrast with a multiple-step income statement,a single-step income statement does not show the amount of

All of the following components are shown in the income statement net of applicable income taxes EXCEPT

On a multiple-step income statement,gains or losses on sale of equipment would be shown

Which of the following categories of expenses is subject to immediate recognition on the income statement?

The following information is available for Superior Company for 2014: What amount should Superior report as cost of goods sold for 2014?

Which of the following would be treated as an extraordinary item?

Astro Incorporated's financial statements for the years 2014 and 2015 contained the following errors: Assuming that none of the errors were detected or corrected,and that no additional errors were made in 2016,by what amount will current assets at December 31,2016,be overstated or understated?

All of the following represent the likely options for financing business expansion except

When a business segment is discontinued during the year,the gain or loss on disposal

The following data are available from the records of Mandarin,Inc.: Prepare a single-step income statement and a retained earnings statement for Mandarin,Inc.for the year ended December 31,2014.

Financial Reporting

A Review of the Accounting Cycle

The Balance Sheet and Notes to the Financial Statements

Statement of Cash Flows and Articulation

Earnings Management

The Revenuereceivablescash Cycle

Revenue Recognition

Inventory and Cost of Goods Sold

Investments in Noncurrent Operating Assets-Acquisition

Investments in Noncurrent Operating Assets-Utilization and Retirement

Debt Financing

Equity Financing

Investments in Debt and Equity Securities

Leases

Income Taxes

Employee Compensation-Payroll,pensions, Other Compissues

Earnings Per Share

Derivatives, contingencies, business Segments, and Interim Reports

Accounting Changes and Error Corrections

Statement of Cash Flows Revisited

Accounting in a Global Market

Analysis of Financial Statements

Filters