Quiz4
Question 1
1. The major elements of the income statement are
A. revenue, cost of goods sold, selling expenses, and general expense.
B. revenues, expenses, gains, and losses.
C. operating section, nonoperating section, discontinued operations, extraordinary
items, and cumulative effect.
D. revenues, irregular items, and general expenses.
2.273 points
Question 2
1. Which of the following is an example of managing earnings up?
A. Underestimating warranty claims.
B. Writing off obsolete inventory.
C. Decreasing estimated salvage value of equipment.
D. Accruing a contingent liability for an ongoing lawsuit.
2.273 points
Question 3
1. Which of the following is an acceptable method of presenting the income statement?
A. A single-step income statement
B. A multiple-step income statement
C. A consolidated statement of income
D. All of these answer choices are correct.
2.273 points
Question 4
1. The occurrence which most likely would have no effect on 2014 net income (assuming
that all amounts involved are material) is the
A. settlement based on litigation in 2014 of previously unrecognized damages from a
serious accident that occurred in 2012.
B. worthlessness determined in 2014 of stock purchased on a speculative basis in
2010.
C. sale in 2014 of an office building contributed by a stockholder in 1983.
D. collection in 2014 of a receivable from a customer whose account was written off
in 2013 by a charge to the allowance account.
2.273 points
Question 5
1. The accountant for the Lintz Sales Company is preparing the income statement for 2014
and the balance sheet at December 31, 2014. The January 1, 2014 merchandise inventory
balance will appear
A. only in the cost of goods sold section of the income statement.
B. only as an asset on the balance sheet.
C. as an addition in the cost of goods sold section of the income statement and as a
current asset on the balance sheet.
D. as a deduction in the cost of goods sold section of the income statement and as a
current asset on the balance sheet.
2.273 points
Question 6
1. In order to be classified as an extraordinary item in the income statement, an event or
transaction should be
A. unusual in nature, infrequent, and material in amount.
B. unusual in nature and material, but it need not be infrequent.
C. unusual in nature and infrequent, but it need not be material.
D. infrequent and material in amount, but it need not be unusual in nature.
2.273 points
Question 7 It’s bullshit, I can’t find answer online for this question. Sorry guys,
but D is NOT an answer for sure. B is definetly right answer
1. A change in accounting principle requires that the cumulative effect of the change for
prior periods be shown as an adjustment to:
A. stockholders’ equity of the period in which the change occurred.
B. beginning retained earnings of the earliest period presented.
C. net income of the period in which the change occurred.
D. comprehensive income for the earliest period presented.
2.273 points
Question 8
1. A material item which is unusual in nature or infrequent in occurrence, but not both
should be shown in the income statement
Net of Tax Disclosed Separately
2.
A. No Yes
B. No No
C. Yes No
D. Yes Yes
2.273 points
Question 9
1. Income taxes are allocated to
A. extraordinary items.
B. discontinued operations.
C. prior period adjustments.
D. all of these answer choices are correct.
2.273 points
Question 10
1. Companies use intraperiod tax allocation for all of the following items except
A. changes in accounting estimates.
B. extraordinary items.
C. discontinued operations.
D. income from continuing operations.
2.273 points
Question 11
1. Which of the following items would be reported net of tax on the face of the income
statement?
A. Discontinued operations
B. Unusual gain
C. Change in realizability of receivables
D. Prior period adjustment
2.273 points
Question 12
1. Which of the following items would be reported at its gross amount on the face of the
income statement?
A. Prior period adjustment
B. Cumulative effect of a change in an accounting principle
C. Unusual gain
D. Extraordinary loss
2.273 points
Question 13
1. Where must earnings per share be disclosed in the financial statements to satisfy
generally accepted accounting principles?
A. On the face of the balance sheet.
B. In the footnotes to the financial statements.
C. On the face of the statement of retained earnings (or, statement of stockholders’
equity.)
D. On the face of the income statement.
2.273 points
Question 14
1. Which of the following earnings per share figures must be disclosed on the face of the
income statement?
A. EPS for gross profit.
B. EPS for income before taxes.
C. The effect on EPS from unusual items.
D. EPS for income from continuing operations.
2.273 points
Question 15
