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

Swiger Music Company had the following information related to its financial statements: 1) The company issued bonds in the amount of $50,000. 2) Earned net income of $78,900, declared a cash dividend of $0.25 per share, currently there are 50,000 shares issued. 3) Retained earnings at January 1, 2014 was $82,000. Required: Prepare the reconciliation of retained earnings for December 31, 2014.

Revenue can be recognized either when it is earned or collection has occurred or reasonably certain to occur.

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

There is no prescribed income statement format under IFRS whereas U.S. GAAP requires the use of the single-step or the multiple-step format.

Which of the following statements regarding a statement of cash flows is false?

List five items that the FASB specifically states cannot be considered extraordinary.

In general, revenue is recognized as being earned

Lester Company reported the following information for the year ended December 31, 2014: Lester's earnings per share for 2014 was

What are the three expense recognition principles used to properly recognize expense either by matching revenues or matching periods?

How should a material, infrequent event not meeting the criteria for an extraordinary item be disclosed in the income statement?

The statement of cash flows provides external users the ability to analyze the information required to access a company's risk, liquidity, financial flexibility, and operating capability.