Question 1

A change from the straight-line method of depreciation to an accelerated method should be accounted for as a(n)

Accepted Answer

A)  change in an accounting estimate. 
B)  change in an accounting principle. 
C)  prior period adjustment. 
D)  accounting error. 
A)  change in an accounting estimate. 
B)  change in an accounting principle. 
C)  prior period adjustment. 
D)  accounting error.

Question 2

A material loss should be presented separately as a component of income from continuing operations when it is

Accepted Answer

A)  infrequent in occurrence but not unusual in nature. 
B)  infrequent in occurrence and unusual in nature. 
C)  a cumulative effect-type change in accounting principle. 
D)  an extraordinary item. 
A)  infrequent in occurrence but not unusual in nature. 
B)  infrequent in occurrence and unusual in nature. 
C)  a cumulative effect-type change in accounting principle. 
D)  an extraordinary item.

Question 3

Saginaw Inc.decided on August 1,2014,to dispose of a component of its business.The component was sold on November 30,2014.Saginaw's income for 2014 included income of $250,000 from operating the discontinued segment from January 1 to the sale date.Saginaw incurred a loss on the November 30 sale of $220,000.Ignoring income taxes,what amount should be reported in the 2014 income statement as the net income or loss under "Discontinued Operations"?

Accepted Answer

A)  $220,000 loss 
B)  $30,000 loss 
C)  $30,000 income 
D)  $250,000 income 
A)  $220,000 loss 
B)  $30,000 loss 
C)  $30,000 income 
D)  $250,000 income

Question 4

The term "comprehensive income" as defined by the FASB

Accepted Answer

A)  must be reported on the face of the income statement. 
B)  includes all changes in equity during a period except those resulting from investments by and distributions to owners. 
C)  is the net change in owners' equity for the period. 
D)  is synonymous with the term "net income." 
A)  must be reported on the face of the income statement. 
B)  includes all changes in equity during a period except those resulting from investments by and distributions to owners. 
C)  is the net change in owners' equity for the period. 
D)  is synonymous with the term "net income."

Question 5

The normal ordering of items in the income statement would be best illustrated by which of the following?

Accepted Answer

A)  Extraordinary items,cumulative effects,income from continuing operations,discontinued operations,net income 
B)  Income from continuing operations,discontinued operations,extraordinary items,cumulative effects,net income 
C)  Income from continuing operations,extraordinary items,cumulative effects,discontinued operations,net income 
D)  Discontinued operations,income from continuing operations,extraordinary items,cumulative effects,net income 
A)  Extraordinary items,cumulative effects,income from continuing operations,discontinued operations,net income 
B)  Income from continuing operations,discontinued operations,extraordinary items,cumulative effects,net income 
C)  Income from continuing operations,extraordinary items,cumulative effects,discontinued operations,net income 
D)  Discontinued operations,income from continuing operations,extraordinary items,cumulative effects,net income

Question 6

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 7

Cultivo Corporation's capital stock at December 31 consisted of the following:   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

Question 8

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 9

The changes in account balances of the Dunedin Corporation during 2014 are presented below:   Assuming there are no changes in retained earnings except for net income and a dividend payment of $19,500,the net income for 2014 should be

Accepted Answer

A)  $6,000. 
B)  $13,500. 
C)  $19,500. 
D)  $25,500. 
A)  $6,000. 
B)  $13,500. 
C)  $19,500. 
D)  $25,500.

Question 10

All of the following are a component of comprehensive income except

Accepted Answer

A)  unrealized gains and losses on trading securities. 
B)  foreign currency translation adjustment. 
C)  deferred gains and losses on derivative financial instruments. 
D)  change in the minimum pension liability. 
A)  unrealized gains and losses on trading securities. 
B)  foreign currency translation adjustment. 
C)  deferred gains and losses on derivative financial instruments. 
D)  change in the minimum pension liability.

Question 11

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 12

On December 31,2014 and 2015,Williams Corporation had 100,000 shares of common stock and 50,000 shares of noncumulative and nonconvertible preferred stock issued and outstanding.Additional information:   The price-earnings ratio on common stock at December 31,2015,was

Accepted Answer

A)  10 to 1. 
B)  12 to 1. 
C)  14 to 1. 
D)  16 to 1. 
A)  10 to 1. 
B)  12 to 1. 
C)  14 to 1. 
D)  16 to 1.

Question 13

The revenue principle states that revenue should be recognized at a point when

Accepted Answer

A)  an exchange transaction involving goods and services has occurred and the earnings process is essentially complete. 
B)  an order for shipment of a definite amount of merchandise has been received. 
C)  a contract between buyer and seller has been signed by both parties. 
D)  the seller has shipped merchandise to a customer under the terms that the customer need not pay for the merchandise until it is sold. 
A)  an exchange transaction involving goods and services has occurred and the earnings process is essentially complete. 
B)  an order for shipment of a definite amount of merchandise has been received. 
C)  a contract between buyer and seller has been signed by both parties. 
D)  the seller has shipped merchandise to a customer under the terms that the customer need not pay for the merchandise until it is sold.

Question 14

Panther Corp.reported the following pretax amounts for the year ending December 31,2014:
   The income tax rate applicable to Panther is 30 percent.Prepare a partial income statement for the year ending December 31,2014,beginning with "Income from continuing operations before income taxes." Include the presentation of earnings per share,assuming 50,000 shares were outstanding during the year.

Accepted Answer

The answer of Panther Corp.reported the following pretax amounts for...

Question 15

According to the FASB's conceptual framework,comprehensive income includes which of the following? Gross Profit Operating Income

Accepted Answer

A)  No No 
B)  No Yes 
C)  Yes Yes 
D)  Yes No 
A)  No No 
B)  No Yes 
C)  Yes Yes 
D)  Yes No

Question 16

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 17

Starship Corporation incurred the following losses during 2014:   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 18

Changes in accounting principles generally are reported as

Accepted Answer

A)  adjustments to current and/or prior period statements. 
B)  extraordinary items. 
C)  adjustments to current period statements only. 
D)  adjustments to prior period statements. 
A)  adjustments to current and/or prior period statements. 
B)  extraordinary items. 
C)  adjustments to current period statements only. 
D)  adjustments to prior period statements.

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:

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

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.

A change from the straight-line method of depreciation to an accelerated method should be accounted for as a(n)

A material loss should be presented separately as a component of income from continuing operations when it is

The term "comprehensive income" as defined by the FASB

The normal ordering of items in the income statement would be best illustrated by which of the following?

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

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

The changes in account balances of the Dunedin Corporation during 2014 are presented below: Assuming there are no changes in retained earnings except for net income and a dividend payment of $19,500,the net income for 2014 should be

All of the following are a component of comprehensive income except

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?

On December 31,2014 and 2015,Williams Corporation had 100,000 shares of common stock and 50,000 shares of noncumulative and nonconvertible preferred stock issued and outstanding.Additional information: The price-earnings ratio on common stock at December 31,2015,was

The revenue principle states that revenue should be recognized at a point when

According to the FASB's conceptual framework,comprehensive income includes which of the following? Gross Profit Operating Income

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

Starship Corporation incurred the following losses during 2014: Ignoring income taxes,what amount of loss should Starship report as extraordinary on its annual income statement?

Changes in accounting principles generally are reported as

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:

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

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

A change from the straight-line method of depreciation to an accelerated method should be accounted for as a(n)

A material loss should be presented separately as a component of income from continuing operations when it is

The term "comprehensive income" as defined by the FASB

The normal ordering of items in the income statement would be best illustrated by which of the following?

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

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

The changes in account balances of the Dunedin Corporation during 2014 are presented below: Assuming there are no changes in retained earnings except for net income and a dividend payment of $19,500,the net income for 2014 should be

All of the following are a component of comprehensive income except

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?

On December 31,2014 and 2015,Williams Corporation had 100,000 shares of common stock and 50,000 shares of noncumulative and nonconvertible preferred stock issued and outstanding.Additional information: The price-earnings ratio on common stock at December 31,2015,was

The revenue principle states that revenue should be recognized at a point when

According to the FASB's conceptual framework,comprehensive income includes which of the following? Gross Profit Operating Income

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

Starship Corporation incurred the following losses during 2014: Ignoring income taxes,what amount of loss should Starship report as extraordinary on its annual income statement?

Changes in accounting principles generally are reported as

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:

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

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