Question 1

From the following information, compute cost of goods sold.

Accepted Answer

A)  $15,300 
B)  $15,200 
C)  $15,100 
D)  $15,000 
A)  $15,300 
B)  $15,200 
C)  $15,100 
D)  $15,000

Question 2

Which of the following events would be classified as an operating activity in a statement of cash flows?

Accepted Answer

A)  receipt of cash dividend on an equity investment 
B)  sale of a long-term investment 
C)  issuing notes payable 
D)  payment of cash dividends 
A)  receipt of cash dividend on an equity investment 
B)  sale of a long-term investment 
C)  issuing notes payable 
D)  payment of cash dividends

Question 3

Which of the following is not an expense recognition approach recognized by the FASB as an expense recognition principle to properly match expenses against revenues?

Accepted Answer

A)  immediate recognition 
B)  systematic and rational allocation 
C)  cash payment 
D)  association of cause and effect 
A)  immediate recognition 
B)  systematic and rational allocation 
C)  cash payment 
D)  association of cause and effect

Question 4

Which of the following is not a component of the income statement?

Accepted Answer

A)  unusual and nonrecurring gains and losses 
B)  net income 
C)  income taxes 
D)  accumulated other comprehensive income 
A)  unusual and nonrecurring gains and losses 
B)  net income 
C)  income taxes 
D)  accumulated other comprehensive income

Question 5

Under GAAP for segment reporting, a company must report

Accepted Answer

A)  a measure of profit or loss for each reportable segment 
B)  factors used to identify its reportable segments 
C)  the types of products and services from which each reporting segment derives its revenues 
D)  all of these 
A)  a measure of profit or loss for each reportable segment 
B)  factors used to identify its reportable segments 
C)  the types of products and services from which each reporting segment derives its revenues 
D)  all of these

Question 6

The income statement information for 2014 and 2015 of Kloe Company is as follows:   Required:
Fill in the blanks for the missing data. All the necessary information is listed.

Accepted Answer

@#IMG-DLM&_TB6205_00

Question 7

IFRS content in the income statement is similar to U.S. GAAP in all of the following areas except the disclosure of

Accepted Answer

A)  revenues 
B)  finance costs 
C)  extraordinary items 
D)  tax expense 
A)  revenues 
B)  finance costs 
C)  extraordinary items 
D)  tax expense

Question 8

Below is a list of account balances for Fraggle Company:   What is Fraggle Company's net income, assuming a 30% tax rate?

Accepted Answer

A)  $163,380 
B)  $233,400 
C)  $242,500 
D)  none of these 
A)  $163,380 
B)  $233,400 
C)  $242,500 
D)  none of these

Question 9

The subtotal, gross profit, will be disclosed on

Accepted Answer

A)  a multiple-step income statement 
B)  both multiple-step and single-step income statements 
C)  neither multiple-step nor single-step income statements 
D)  a single-step income statement 
A)  a multiple-step income statement 
B)  both multiple-step and single-step income statements 
C)  neither multiple-step nor single-step income statements 
D)  a single-step income statement

Question 10

Below are the income statement and balance sheet for Lily Company:     Required:
Compute the following ratios:

Accepted Answer

The answer of Below are the income statement and balance...

Question 11

Expenses that affect the operating activities of more than one interim period are allocated among the periods based on an estimate of

Accepted Answer

A)  time expired 
B)  benefit received 
C)  activity associated with the periods 
D)  all of these 
A)  time expired 
B)  benefit received 
C)  activity associated with the periods 
D)  all of these

Question 12

Which of the following events would be classified as an investing activity on a statement of cash flows?

Accepted Answer

A)  payment of interest on a loan 
B)  receipt of cash dividends on an available-for-sale investment 
C)  purchase of inventory 
D)  sale of an office building at a gain 
A)  payment of interest on a loan 
B)  receipt of cash dividends on an available-for-sale investment 
C)  purchase of inventory 
D)  sale of an office building at a gain

Question 13

A terrorist attack would be considered an extraordinary event because terrorist attacks are infrequent in nature.

Accepted Answer

A) True 
 B)False

Question 14

How should the gain or loss that is considered infrequent but not unusual in nature be disclosed?

Accepted Answer

A)  separately in the income statement immediately after income from continuing operations 
B)  on a net-of-tax basis in the income statement immediately after income from continuing operations 
C)  as an extraordinary item 
D)  separately in the income statement as a component of income from continuing operations 
A)  separately in the income statement immediately after income from continuing operations 
B)  on a net-of-tax basis in the income statement immediately after income from continuing operations 
C)  as an extraordinary item 
D)  separately in the income statement as a component of income from continuing operations

Question 15

Exhibit 5-1 The following condensed income statement of Ranger Corporation is presented for the two years ended December 31, 2014 and 2013:

On January 1, 2014, Ranger entered into an agreement to sell one of its separate operating divisions for $2,000,000. The sale resulted in a gain on disposition of $900,000 on November 12, 2014, and qualifies as a discontinued component. This division's contribution to Ranger's reported income before income taxes for each year was as follows: 
  
Assume an income tax rate of 30%.

-Refer to Exhibit 5-1. In the preparation of a revised comparative income statement, Ranger should report income from continuing operations after income taxes for 2014 and 2013, respectively, amounting to

Accepted Answer

A)  $1,540,000 and $700,000 
B)  $1,540,000 and $980,000 
C)  $1,680,000 and $700,000 
D)  $1,680,000 and $980,000 
A)  $1,540,000 and $700,000 
B)  $1,540,000 and $980,000 
C)  $1,680,000 and $700,000 
D)  $1,680,000 and $980,000

Question 16

What criteria must be met in order for a company to classify a component as held for sale?

Accepted Answer

Management has committed to a plan to se

Question 17

Operating capability refers to

Accepted Answer

A)  the ability of a company to adapt to unexpected needs and opportunities 
B)  the uncertainty or unpredictability of the future results of a company 
C)  a measure of overall company performance 
D)  a company's ability to maintain a given level of operations 
A)  the ability of a company to adapt to unexpected needs and opportunities 
B)  the uncertainty or unpredictability of the future results of a company 
C)  a measure of overall company performance 
D)  a company's ability to maintain a given level of operations

Question 18

Which of the following is included in comprehensive income?

Accepted Answer

A)  gains and losses associated with derivative financial instruments that hedge future cash flows 
B)  translation adjustments from converting foreign statements into U.S. dollars 
C)  unrealized gains or losses associated with fair value of available-for-sale securities 
D)  all of these 
A)  gains and losses associated with derivative financial instruments that hedge future cash flows 
B)  translation adjustments from converting foreign statements into U.S. dollars 
C)  unrealized gains or losses associated with fair value of available-for-sale securities 
D)  all of these

Question 19

In a statement of cash flows, which of the following events would be classified as a financing activity?

Accepted Answer

A)  purchase of a trading security 
B)  payment of interest on a loan 
C)  payment of cash dividends to shareholders 
D)  all of these 
A)  purchase of a trading security 
B)  payment of interest on a loan 
C)  payment of cash dividends to shareholders 
D)  all of these

Question 20

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

Accepted Answer

A)  transactions with nonowners 
B)  events relating to nonowner sources 
C)  circumstances relating to nonowner sources 
D)  distributions to owners 
A)  transactions with nonowners 
B)  events relating to nonowner sources 
C)  circumstances relating to nonowner sources 
D)  distributions to owners

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

From the following information, compute cost of goods sold.

Which of the following events would be classified as an operating activity in a statement of cash flows?

Which of the following is not an expense recognition approach recognized by the FASB as an expense recognition principle to properly match expenses against revenues?

Which of the following is not a component of the income statement?

Under GAAP for segment reporting, a company must report

The income statement information for 2014 and 2015 of Kloe Company is as follows: Required: Fill in the blanks for the missing data. All the necessary information is listed.

IFRS content in the income statement is similar to U.S. GAAP in all of the following areas except the disclosure of

Below is a list of account balances for Fraggle Company: What is Fraggle Company's net income, assuming a 30% tax rate?

The subtotal, gross profit, will be disclosed on

Below are the income statement and balance sheet for Lily Company: Required: Compute the following ratios:

Expenses that affect the operating activities of more than one interim period are allocated among the periods based on an estimate of

Which of the following events would be classified as an investing activity on a statement of cash flows?

A terrorist attack would be considered an extraordinary event because terrorist attacks are infrequent in nature.

How should the gain or loss that is considered infrequent but not unusual in nature be disclosed?

What criteria must be met in order for a company to classify a component as held for sale?

Operating capability refers to

Which of the following is included in comprehensive income?

In a statement of cash flows, which of the following events would be classified as a financing activity?

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

The Demand for and Supply of Financial Accounting Information

Financial Reporting: Its Conceptual Framework

Review of a Companys Accounting System

The Balance Sheet and the Statement of Shareholders Equity

Cash and Receivables

Inventories: Cost Measurement and Flow Assumptions

Inventories: Special Valuation Issues

Current Liabilities and Contingencies

Property, Plant, and Equipment: Acquisition and Subsequent Investments

Depreciation, Depletion, Impairment, and Disposal

Intangibles

Investments and Long-Term Receivables

Financing Liabilities: Bonds and Notes Payable

Contributed Capital

Retained Earnings and Earnings Per Share

Advanced Issues in Revenue Recognition

Accounting for Income Taxes

Accounting for Postretirement Benefits

Accounting for Leases

The Statement of Cash Flows

Accounting for Changes and Errors

Time Value of Money Module

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