Question 1

Comprehensive income differs from net income in that it includes events that are recognized but not realized.

Accepted Answer

A) True 
 B)False

Question 2

A restriction of retained earnings:

Accepted Answer

A) Reduces the dollar amount of retained earnings shown in the balance sheet. 
B) Appears in the statement of retained earnings as a reduction of ending retained earnings. 
C) Appears in the liability section of the balance sheet. 
D) Limits the dollar amount of dividends a corporation may declare. 
A) Reduces the dollar amount of retained earnings shown in the balance sheet. 
B) Appears in the statement of retained earnings as a reduction of ending retained earnings. 
C) Appears in the liability section of the balance sheet. 
D) Limits the dollar amount of dividends a corporation may declare.

Question 3

Dividends are first recorded and retained earnings are reduced on:

Accepted Answer

A) The ex-dividend date. 
B) The date of record. 
C) The date of declaration. 
D) The date of payment. 
A) The ex-dividend date. 
B) The date of record. 
C) The date of declaration. 
D) The date of payment.

Question 4

A prior period adjustment appears in the financial statements of the current year when:

Accepted Answer

A) An error was made in computing the net income of the current period. 
B) An error was made in measuring the net income of a previous year or years. 
C) A non-recurring loss in a prior year was included among normal results of operations in the prior year. 
D) Earnings per share figures from prior years are restated to reflect the increased number of shares outstanding due to a stock split or a stock dividend. 
A) An error was made in computing the net income of the current period. 
B) An error was made in measuring the net income of a previous year or years. 
C) A non-recurring loss in a prior year was included among normal results of operations in the prior year. 
D) Earnings per share figures from prior years are restated to reflect the increased number of shares outstanding due to a stock split or a stock dividend.

Question 5

The statement of stockholders' equity:

Accepted Answer

A) Is a required financial statement. 
B) May be issued as a substitute for the statement of retained earnings. 
C) Shows the changes during the year in all stockholders' equity accounts except retained earnings. 
D) Is a statement sent to each stockholder showing that person's return on equity. 
A) Is a required financial statement. 
B) May be issued as a substitute for the statement of retained earnings. 
C) Shows the changes during the year in all stockholders' equity accounts except retained earnings. 
D) Is a statement sent to each stockholder showing that person's return on equity.

Question 6

Prior period adjustments appear in the statement of retained earnings and in the income statement for the current year.

Accepted Answer

A) True 
 B)False

Question 7

An example of an unusual and infrequent gain or loss is:

Accepted Answer

A) A large loss arising from inability to collect an account receivable from a bankrupt customer. 
B) A large gain from disposal of a segment of the business. 
C) A gain or loss from sale of an expensive machine no longer needed in the business. 
D) A loss due to restructuring charges. 
A) A large loss arising from inability to collect an account receivable from a bankrupt customer. 
B) A large gain from disposal of a segment of the business. 
C) A gain or loss from sale of an expensive machine no longer needed in the business. 
D) A loss due to restructuring charges.

Question 8

Income statement and earnings per share
Shown below is information relating to operations of Laconia,Inc. ,for 2018:
   In the space provided,complete the income statement for Laconia,Inc. ,including earnings-per-share figures.Laconia has 100,000 shares of a single class of common stock outstanding throughout the year.

Accepted Answer

The answer of Income statement and earnings per share
Shown below...

Question 9

A liquidating dividend:

Accepted Answer

A) Occurs when a corporation distributes shares of its own stock as a dividend,rather than cash. 
B) Occurs whenever a corporation distributes non-cash assets as a dividend to its stockholders. 
C) Represents a distribution of a corporation's profits to the stockholders. 
D) Represents a return of invested capital to a corporation's owners,the stockholders. 
A) Occurs when a corporation distributes shares of its own stock as a dividend,rather than cash. 
B) Occurs whenever a corporation distributes non-cash assets as a dividend to its stockholders. 
C) Represents a distribution of a corporation's profits to the stockholders. 
D) Represents a return of invested capital to a corporation's owners,the stockholders.

Question 10

Which of the following items would be included in the discontinued operations section of the income statement?

Accepted Answer

A) Income or loss from operating the segment prior to its disposal. 
B) The gain or loss on disposal of the segment. 
C) Both the income (loss)from operating the segment prior to its disposal,and the gain or loss on disposal of the segment. 
D) Only losses and not gains on the disposal of a segment. 
A) Income or loss from operating the segment prior to its disposal. 
B) The gain or loss on disposal of the segment. 
C) Both the income (loss)from operating the segment prior to its disposal,and the gain or loss on disposal of the segment. 
D) Only losses and not gains on the disposal of a segment.

Question 11

Doogle Corporation sold a segment of its operations in 2017 and suffered an loss in 2018 that was both unusual and infrequent.Which of the following would be the most useful in attempting to predict Doogle's performance for 2019?

Accepted Answer

A) Doogle's income from continuing operations in 2017 and 2018. 
B) Doogle's net income in 2017 and 2018. 
C) Doogle's total assets at the end of 2018. 
D) Doogle's retained earnings at the end of 2018. 
A) Doogle's income from continuing operations in 2017 and 2018. 
B) Doogle's net income in 2017 and 2018. 
C) Doogle's total assets at the end of 2018. 
D) Doogle's retained earnings at the end of 2018.

Question 12

During the year 2018,Torino Corporation suffered a $1,200,000 loss when its factory was severely damaged in an earthquake.Assuming the corporate income tax rate is 30%,what amount will Torino report as anon-recurring loss on its income statement for 2018? Assume earthquakes are not common in this area.

Accepted Answer

A) $1,200,000 
B) $840,000 
C) $360,000 
D) Nothing,since this does not qualify as a non-recurring item. 
A) $1,200,000 
B) $840,000 
C) $360,000 
D) Nothing,since this does not qualify as a non-recurring item.

Question 13

A company failed to make an adjusting entry in the prior year to accrue earned revenue.To correct this they should:

Accepted Answer

A) Correct last year's statement by increasing net income. 
B) Correct this year's statements with a prior period adjustment increasing beginning retained earnings. 
C) Correct this year's statements with a prior period adjustment decreasing beginning retained earnings. 
D) Correct this year's statements with a prior period adjustment increasing ending retained earnings. 
A) Correct last year's statement by increasing net income. 
B) Correct this year's statements with a prior period adjustment increasing beginning retained earnings. 
C) Correct this year's statements with a prior period adjustment decreasing beginning retained earnings. 
D) Correct this year's statements with a prior period adjustment increasing ending retained earnings.

Question 14

Family Fashions Corporation discontinued Kid-Choice,its entire line of children's clothing,in November of 2018.Prior to the disposal,Kid-Choice generated a loss of $600,000 (net of tax)for the period from January through the sale date.Because of the value of the real estate and machinery,there was a gain of $850,000 (net of tax)on the actual sale.How should this situation be reported in the financial statements of Family Fashions for 2018?

Accepted Answer

A) A $250,000 gain should be included in the 2018 income statement as a non-recurring item. 
B) A $600,000 loss should be included in income from operations and a $850,000 gain should be reported in the "discontinued operations" section of the income statement. 
C) A $250,000 adjustment to beginning retained earnings should be in the statement of retained earnings. 
D) A $250,000 gain should be in the "discontinued operations" section of the income statement. 
A) A $250,000 gain should be included in the 2018 income statement as a non-recurring item. 
B) A $600,000 loss should be included in income from operations and a $850,000 gain should be reported in the "discontinued operations" section of the income statement. 
C) A $250,000 adjustment to beginning retained earnings should be in the statement of retained earnings. 
D) A $250,000 gain should be in the "discontinued operations" section of the income statement.

Question 15

Special sections in an income statement
What is the purpose of arranging an income statement to show a subtotal for Income from Continuing Operations?

Accepted Answer

The purpose of developing subtotals such

Question 16

Stockholders' equity
The stockholders' equity section of the balance sheet of Nautilus Corporation at December 31,2018,appears as follows:
   Answer the following questions based on the stockholders' equity section given above.Each question is a separate situation,unless otherwise indicated.
(a)What is the total dollar amount paid annually as dividends to preferred stockholders?
(b)What was the average issue price per share of preferred stock?
(c)What was the average issue price per share of common stock?
(d)How many shares of common stock are outstanding?
(e)What is the book value per share of the common stock?
(f)If all the treasury stock is reissued at a price of $45 per share,what amount will be credited to the account Additional Paid-In Capital: Treasury Stock Transactions?

Accepted Answer

(a)$100 par × 8% × 14,000 shares = $112,

Question 17

[The following information applies to the questions displayed below.]
The stockholders' equity section of the balance sheet of Caesar Corporation at December 31,2018 appears as follows: (The company engaged in no treasury stock transactions prior to 2018. )
  
-What was the original cost of the treasury stock to Caesar Corporation?

Accepted Answer

A) $5 per share 
B) $7 per share 
C) $8 per share 
D) Cannot be determined 
A) $5 per share 
B) $7 per share 
C) $8 per share 
D) Cannot be determined

Question 18

"Discontinued operations" is an example of an unusual and/or infrequent item.

Accepted Answer

A) True 
 B)False

Question 19

Comprehensive income is a component of net income.

Accepted Answer

A) True 
 B)False

Question 20

Diluted earnings per share are shown to alert investors that earnings per share could increase by the effects of conversions of securities into common stock.

Accepted Answer

A) True 
 B)False

Exam 12: Income and Changes in Retained Earnings

Comprehensive income differs from net income in that it includes events that are recognized but not realized.

A restriction of retained earnings:

Dividends are first recorded and retained earnings are reduced on:

A prior period adjustment appears in the financial statements of the current year when:

The statement of stockholders' equity:

Prior period adjustments appear in the statement of retained earnings and in the income statement for the current year.

An example of an unusual and infrequent gain or loss is:

A liquidating dividend:

Which of the following items would be included in the discontinued operations section of the income statement?

Doogle Corporation sold a segment of its operations in 2017 and suffered an loss in 2018 that was both unusual and infrequent.Which of the following would be the most useful in attempting to predict Doogle's performance for 2019?

A company failed to make an adjusting entry in the prior year to accrue earned revenue.To correct this they should:

Special sections in an income statement What is the purpose of arranging an income statement to show a subtotal for Income from Continuing Operations?

"Discontinued operations" is an example of an unusual and/or infrequent item.

Comprehensive income is a component of net income.

Diluted earnings per share are shown to alert investors that earnings per share could increase by the effects of conversions of securities into common stock.

Accounting: Information for Decision Making

Basic Financial Statements

The Accounting Cycle: Capturing Economic Events

The Accounting Cycle: Accruals and Deferrals

The Accounting Cycle: Reporting Financial Results

Merchandising Activities

Financial Assets

Inventories and the Cost of Goods Sold

Plant and Intangible Assets

Liabilities

Stockholders Equity: Paid-In Capital

Statement of Cash Flows

Financial Statement Analysis

Global Business and Accounting

Management Accounting

Job Order Cost Systems and Overhead Allocations

Process Costing

Costing and the Value Chain

Cost-Volume-Profit Analysis

Incremental Analysis

Responsibility Accounting and Transfer Pricing

Operational Budgeting

Standard Cost Systems

Rewarding Business Performance

Capital Budgeting

the Time Value of Money: Future Amounts and Present Values

Forms of Business Organization

Filters