Exam 4: The Income Statement

Indicate which of the items below should be reported in the financial statements as an extraordinary item.Assume the dollar amounts associated with all items are material. The items are:

Which of the following principles best describes the rationale for matching administrative and selling expenses with revenues of the current period?

If a company anticipates a 40% increase in sales volume,then it is most likely that the company will need about a 40% increase in

Which of the following is correct?

Apollo Company incurred the following infrequent losses during 2014: In its 2014 income statement how much should Apollo report as total infrequent losses that are not considered extraordinary?

On June 30,2014,Sonata Company's operating facilities in Nebraska were destroyed by a flood.The loss of $700,000 was not covered by insurance.Sonata's tax rate for 2014 is 40 percent.In Sonata's income statement for the year ended September 30,2014,this event should be reported as an extraordinary loss of

Stratosphere Manufacturing Company sold plant assets at a gain of $205,000 less related taxes of $62,500.Assuming the gain is not considered unusual or infrequent,Stratosphere's income statement for the period should report

Bad debts are recognized according to which of the following expense recognition principles?

Which of the following items is reported only in current and future periods?

The following pretax amounts pertain to the Spartan Corp.for the year ended December 31,2014. The effective corporate tax rate is 30 percent.The company had 10,000 shares of common stock outstanding for the entire year.

The following data are available from the records of Mandarin,Inc.: Prepare a single-step income statement and a retained earnings statement for Mandarin,Inc.for the year ended December 31,2014.

Which of the following accounting changes requires the restatement of financial statements presented for prior years?

Which of the following is NOT true regarding restructuring charges?

Which of the following events would be considered an extraordinary item?

The following amounts are from Silverton Co.'s 2014 income statement: What amount would Silverton show for income from continuing operations on a multiple-step format income statement?

Funnies-R-Us,Inc.committed to sell its comic book division (a component of the business)on September 1,2014.The book value of the division's net assets was $400,000 and the fair value of the net assets was $350,000.The disposal date is expected to be June 1,2015.The division reported a net loss of $15,000 for the year ended December 31,2014.Ignoring taxes,choose the correct reporting for discontinued operations in the income statement of Funnies-R-Us,Inc. ,for the year ended December 31,2014. Income (Loss)From Gain (Loss)From Disposal Discontinued Operations of Discontinued Operations

The following data are available for Synopsis Products,a partnership: Compute the purchases and the net income for the partnership for 2013,2014,and 2015,assuming that the firm sells its merchandise at 25 percent above cost.

Generally,recognition criteria are met and revenues are recognized

The allowance for doubtful accounts,which appears as a deduction from accounts receivable on a balance sheet,is an application of the

Which of the following is an application of the principle of systematic and rational allocation?