Question 1

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. C

Question 2

Jonathan L.Supreme Company has two divisions,A and B.The operations and cash flows of these two divisions are clearly distinguishable.On July 1,2015,the company decided to dispose of the assets and liabilities of Division B.It is probable that the disposal will be completed early next year.The revenues and expenses of Jonathan L.Supreme Company for 2015 and for the preceding two years are as follows:
   During the latter part of 2015,Jonathan L.Supreme disposed of a portion of Division B and recognized a pretax loss of $8,000 on the disposal.The income tax rate for Jonathan L.Supreme Company is 40%.
Prepare the comparative income statements for Jonathan L.Supreme Company for the years 2013,2014,and 2015.

Accepted Answer

The answer of Jonathan L.Supreme Company has two divisions,A and...

Question 3

All of the following would appear on a single-step income statement except

Accepted Answer

A)  cost of goods sold. 
B)  extraordinary items. 
C)  gross profit. 
D)  discontinued operations. 
A)  cost of goods sold. 
B)  extraordinary items. 
C)  gross profit. 
D)  discontinued operations. C

Question 4

Which of the following approaches to income measurement underlies financial accounting and reporting?

Accepted Answer

A)  Physical capital maintenance approach 
B)  Economic approach 
C)  Valuation approach 
D)  Transaction approach 
A)  Physical capital maintenance approach 
B)  Economic approach 
C)  Valuation approach 
D)  Transaction approach

Question 5

Soluble Water Products had sales during 2014 of $895,000.Soluble's gross profit percentage is 55 percent.Purchases of inventory during 2014 totaled $466,250 and a count of inventory on hand at the end of the year totaled $189,500.Selling expenses are 18 percent of sales and general and administrative expenses are equal to 80 percent of selling expenses.Soluble's income tax rate is 30 percent and the company has 60,000 shares of common stock outstanding.
Prepare an income statement,including earnings per share data,for the year ended December 31,2014.

Accepted Answer

@#IMG-DLM& Cost of goods sold = $895,000 * .45 = $

Question 6

Under the general rule of revenue recognition,revenue is recognized when

Accepted Answer

A)  marketability and market price are assured. 
B)  a contractual agreement exists,and cash collection is assured. 
C)  the earnings process is complete,and a valid promise of payment has been received. 
D)  all related expenses have been incurred. 
A)  marketability and market price are assured. 
B)  a contractual agreement exists,and cash collection is assured. 
C)  the earnings process is complete,and a valid promise of payment has been received. 
D)  all related expenses have been incurred.

Question 7

Which of the following most likely would be considered a discontinued operation?

Accepted Answer

A)  Production or marketing functions are shifted from one location to another. 
B)  A sporting goods manufacturer has a bicycle division that meets FASB's definition of a component of the entity and decides to outsource the manufacture of its bicycles. 
C)  The unprofitable brands of a beauty products component of an entity that manufactures and sells consumer products are discontinued. 
D)  An entity that is a franchiser in the quick-service restaurant business also operates company-owned restaurants that are unprofitable in a certain region and,as a result,the entity decides to exit both the quick-service business as well as the company-owned restaurants in that region. 
A)  Production or marketing functions are shifted from one location to another. 
B)  A sporting goods manufacturer has a bicycle division that meets FASB's definition of a component of the entity and decides to outsource the manufacture of its bicycles. 
C)  The unprofitable brands of a beauty products component of an entity that manufactures and sells consumer products are discontinued. 
D)  An entity that is a franchiser in the quick-service restaurant business also operates company-owned restaurants that are unprofitable in a certain region and,as a result,the entity decides to exit both the quick-service business as well as the company-owned restaurants in that region.

Question 8

Zeus and Company's income statement for the year ended December 31,2014,included the following items:   The office space is used equally by Zeus' sales and accounting departments.What amount of the above-listed items should be classified as general and administrative expenses in Zeus' multiple-step income statement?

Accepted Answer

A)  $1,500,000 
B)  $975,000 
C)  $870,000 
D)  $1,230,000 
A)  $1,500,000 
B)  $975,000 
C)  $870,000 
D)  $1,230,000

Question 9

The financial statements of Bollinger Corporation for 2014 and 2015 contained the following errors:   Assuming that none of the errors were detected or corrected,by what amount will 2015 operating income be overstated or understated?

Accepted Answer

A)  $40,600 understated 
B)  $35,800 understated 
C)  $27,800 understated 
D)  $13,400 overstated 
A)  $40,600 understated 
B)  $35,800 understated 
C)  $27,800 understated 
D)  $13,400 overstated

Question 10

The amount of income reported for tax purposes

Accepted Answer

A)  is normally greater than the net income reported to stockholders. 
B)  must be computed according to GAAP. 
C)  is used to compute earnings per share. 
D)  may differ from the amount of income determined for financial reporting purposes. 
A)  is normally greater than the net income reported to stockholders. 
B)  must be computed according to GAAP. 
C)  is used to compute earnings per share. 
D)  may differ from the amount of income determined for financial reporting purposes.

Question 11

Accrual-basis net income is most useful for

Accepted Answer

A)  determining the amount of income tax a company should pay. 
B)  predicting the short-term performance of an enterprise. 
C)  predicting the long-term performance of an enterprise. 
D)  determining the amount of dividends a company should pay. 
A)  determining the amount of income tax a company should pay. 
B)  predicting the short-term performance of an enterprise. 
C)  predicting the long-term performance of an enterprise. 
D)  determining the amount of dividends a company should pay.

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

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 14

A company that changes from the declining-balance method of depreciation for previously recorded assets to the straight-line method should report the change as a(n)

Accepted Answer

A)  change in accounting principle. 
B)  change in accounting estimate. 
C)  prior period adjustment. 
D)  extraordinary item. 
A)  change in accounting principle. 
B)  change in accounting estimate. 
C)  prior period adjustment. 
D)  extraordinary item.

Question 15

The financial statements of Mannassass Corporation for 2014 and 2015 contained the following errors:   Assuming that none of the errors were detected or corrected,by what amount will 2014 operating income be overstated or understated?

Accepted Answer

A)  $9,200 overstated 
B)  $9,200 understated 
C)  $18,800 understated 
D)  $18,800 overstated 
A)  $9,200 overstated 
B)  $9,200 understated 
C)  $18,800 understated 
D)  $18,800 overstated

Question 16

International Accounting Standard 8 requires

Accepted Answer

A)  a restatement of prior years' income for a change in accounting principle. 
B)  the reporting of the cumulative effect of a change in accounting principle as part of net income in the year of the change. 
C)  the reporting of the cumulative effect of a change in accounting principle as a direct adjustment to beginning retained earnings in the year of the change. 
D)  the amortization of the cumulative effect of a change in accounting principle over the future periods expected to be affected by the change. 
A)  a restatement of prior years' income for a change in accounting principle. 
B)  the reporting of the cumulative effect of a change in accounting principle as part of net income in the year of the change. 
C)  the reporting of the cumulative effect of a change in accounting principle as a direct adjustment to beginning retained earnings in the year of the change. 
D)  the amortization of the cumulative effect of a change in accounting principle over the future periods expected to be affected by the change.

Question 17

The following expenses were recognized by Koenig Company,a retailer,during 2014:   What should Koenig report as general and administrative expenses for 2014?

Accepted Answer

A)  $252,000 
B)  $289,000 
C)  $284,000 
D)  $389,000 
A)  $252,000 
B)  $289,000 
C)  $284,000 
D)  $389,000

Question 18

Which of the following is NOT an acceptable basis for the recognition of expenses?

Accepted Answer

A)  Cash disbursement 
B)  Direct matching 
C)  Immediate recognition 
D)  Systematic and rational allocation 
A)  Cash disbursement 
B)  Direct matching 
C)  Immediate recognition 
D)  Systematic and rational allocation

Question 19

An earthquake destroyed the home office building of a company located in an inland city.This should be reported as a(n)

Accepted Answer

A)  extraordinary loss. 
B)  prior period adjustment. 
C)  loss from continuing operations. 
D)  loss from discontinued operations. 
A)  extraordinary loss. 
B)  prior period adjustment. 
C)  loss from continuing operations. 
D)  loss from discontinued operations.

Question 20

Jaguar Corp.purchased a patent on January 2,2009,for $700,000.The original life of the patent was estimated to be 14 years.In December of 2014,the company received information that the patent would be obsolete within 4 years.Accordingly,the company decided to write off the unamortized portion of the patent cost over 5 years beginning in 2014.
How would the change in useful life be reflected in the accounts for 2014 and subsequent years?

Accepted Answer

The answer of Jaguar Corp.purchased a patent on January 2,2009,for...

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

All of the following would appear on a single-step income statement except

Which of the following approaches to income measurement underlies financial accounting and reporting?

Under the general rule of revenue recognition,revenue is recognized when

Which of the following most likely would be considered a discontinued operation?

The financial statements of Bollinger Corporation for 2014 and 2015 contained the following errors: Assuming that none of the errors were detected or corrected,by what amount will 2015 operating income be overstated or understated?

The amount of income reported for tax purposes

Accrual-basis net income is most useful for

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

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

A company that changes from the declining-balance method of depreciation for previously recorded assets to the straight-line method should report the change as a(n)

The financial statements of Mannassass Corporation for 2014 and 2015 contained the following errors: Assuming that none of the errors were detected or corrected,by what amount will 2014 operating income be overstated or understated?

International Accounting Standard 8 requires

The following expenses were recognized by Koenig Company,a retailer,during 2014: What should Koenig report as general and administrative expenses for 2014?

Which of the following is NOT an acceptable basis for the recognition of expenses?

An earthquake destroyed the home office building of a company located in an inland city.This should be reported as a(n)

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

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

All of the following would appear on a single-step income statement except

Which of the following approaches to income measurement underlies financial accounting and reporting?

Under the general rule of revenue recognition,revenue is recognized when

Which of the following most likely would be considered a discontinued operation?

The financial statements of Bollinger Corporation for 2014 and 2015 contained the following errors: Assuming that none of the errors were detected or corrected,by what amount will 2015 operating income be overstated or understated?

The amount of income reported for tax purposes

Accrual-basis net income is most useful for

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

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

A company that changes from the declining-balance method of depreciation for previously recorded assets to the straight-line method should report the change as a(n)

The financial statements of Mannassass Corporation for 2014 and 2015 contained the following errors: Assuming that none of the errors were detected or corrected,by what amount will 2014 operating income be overstated or understated?

International Accounting Standard 8 requires

The following expenses were recognized by Koenig Company,a retailer,during 2014: What should Koenig report as general and administrative expenses for 2014?

Which of the following is NOT an acceptable basis for the recognition of expenses?

An earthquake destroyed the home office building of a company located in an inland city.This should be reported as a(n)

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