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The difference between single-step and multiple-step income statements is primarily an issue of
Popson Inc. incurred a material loss which was not unusual in character but was clearly an infrequent occurrence. This loss should be reported as
C. A separate line item within income from continuing operations
Freda's Florist reported the following before-tax income statement items for the year ended Dec 31, 2011
C 100000 and 128000 respectively
The distinction between operating and nonoperating income relates to
B. Principal activities of the reporting entity
The principal benefit of separately reporting discontinued operations and extraordinary items is to enhance
A. Predictive ability
The Claxton Company manufactures children's toys and also has a division that makes automobile parts. Due to a change in its strategic focus, the company sold the automobile parts division. The division qualifies as a component of the entity according to GAAP regarding disposal of long-lived assets. How should Claxton report the sale in its 2011 income statement?
A. As an extraordinary item.
B. As a discontinued operation, reported below income from continuing operations
On August 1, 2011, Rocket Retailers adopted a plan to discontinue its catalog sales division, which qualifies as a separate component of the business according to GAAP regarding discontinued operations. The disposal of the division was expected to be concluded by June 30, 2012. On January 31, 2012, Rocket's fiscal year-end, the following information relative to the discontinued division was accumulated:
On November 1, 2011, Jamison Inc adopted a plan to discontinue its barge division, which qualifies as a separate component of the business according to GAAP regarding discontinued operations. The disposal of the division was expected to be concluded by April 30, 2012. On December 31, 2011, the company's year-end, the following information relative to the discontinued division was accumulated:
A. 65 million
On October 28, 2011, Mercedes Company committed to a plan to sell a division that qualified as a component of the entity according to GAAP regarding discontinued operations and was properly classified as helf for sale on Dec 31, 2011, the end of the compnay's fiscal year. The division's loss from operations for 2011 was $2000000
B. 2500000 loss
The division's BV and FV less cost to sell on Dec 31 were 3000000 and 3500000 respectively. What before-tax amounts should Mercedes report as loss on discontinued operations in its 2011 income statement?
A. 2000000 loss
On May 1, Foxtrot co. aggreed to sell the assets of its Footwear Division to Albanese for $80 million. The sale was completed on Dec 31,2011.
C. Income (loss) from its continuing and discontinued operations separately.
In the 2011 income statement for Foxtrot Co, it would report
B. Income taxes would be separated fro continuing and discontinued operations
In the 2011 income statement for Foxtrot Co, it would report income from discontinued operations of
B. 13.2 million
Suppose that the Footwear Division's assets had not been sold by Dec 31, 2011, but were considered held for sale. Assume that the fair value was $40 million. In the 2011 income statement for Foxtrot Co., it would report a loss from discontinued operations of
C. 10.8 million loss
Suppose that the Footwear Division's assets had not been sold by December 31, 2011, but were considered held for sale. Assume that the fair value of these assets at December 31 was $80 million. In the 2011 income statement for Foxtrot Co., under discontinued operations it would report a:
A. 6 million loss
Major Co reported 2011 income of 300000 from continuing operations before income taxes and a before-tax extraordinary loss of 80000.
B. 90000 and 154000
Howard Co's 2011 income from continuing operations before income taxes was 280000. Howard Co reported a before-tax extraordinary gain of 50000.
A. 198000 and 112000
Misty Company reported the following before-tax items during the current year: Misty's effective tax rate is 40%
Cal's Cookies reported 2011 before-tax income before extraordinary items of 152000 and a before-tax extraordinary loss of 32000. All tax items are subject to a 30% tax rate.
B. 84000 and 45600
A voluntary change in accounting principle is accounted for by:
B. A retrospective reporting of all comparative financial statements
A change in depreciation method is accounted for
C. Prospectively like changes in accounting estimates
On June 1, 2011, Romano Inc. changed the estimated useful life of its office equipment from 20 to 12 years. This change would be accounted for
The financial statement presentation of a change in depreciation method is most similar to that of reporting
A. Changes in accounting estimates
Jack's Fireworks, which was established in 2009, changed its method of accounting for inventories from the average cost method to the FIFO method in 2011. Cost of goods sold for the periods 2009-2011 under FIFO and the average cost method were:
B. Option b
In its Dec 31, 2011 financial statements, E-Z prices estimated that losses on its current receivables would be 10.2 million. During 2012, E-Z Prices determined that the losses on the receivables were actually 12.4 million. Ignoring taxes, E-Z Prices would report, in its 2012 financial statements, the additional $2.2 million loss on receivables as:
D. A current year's expense
The financial statement presentation of a change in reporting entity is most similar to the reporting of a:
D. Correction of a material error discovered after the year the error was made
If Company A acquires Company B, required financial statement disclosure include all of the following except:
B. the effect of the change on market share
Harley Davis started its unicycle manufacturing business in 2009 and acquired 600000 of equipment at the beginning of 2009. It decided to use the double-declining on its equipment with no residual value and a 10 year useful life. In 2011, Harley Davis would report depreciation of:
Elmore Co. purchased an offset press on Jan 1, 2008, at the cost of 120,000. The press had an estimated eight year life with no residual value. Elmore uses SL. At January 1, 2011, Elmore estimated that the press would have only three more years of remaining life with no residual value. For 2011, Elmore would report depreciation of:
Pablo purchased a lathe on Jan 1, 2009 at a cost of 45000. At the time of purchase, the lathe was expected to have a five year economic life and a residual value of 3000. . Pablo uses straight-line depreciation. At the beginning of 2011, Pablo estimated the lathe to have a remaining life of four years with no residual value. For the year ended December 31, 2011, Pablo would report depreciation of:
Cendant Corporation's results for the year ended Dec 31, 2011, include the following material items: Cendant Corporation income from continuing opertions before income taxes for 2011 is:
The Maytag Corporation's income statement includes income from continuing operations, a loss from discontinued operations, and extraordinary items. earnings per share info would be provided for
D. Income from continuing operations, loss from discontinued operations, extraordinary items and net income.
Each of the following would be reported as items of other comprehensive income except
D. Gains from the sale of equipment
Reporting comprehensive income in the US can be accomplished by which of the following methods
D. all of the above are acceptable methods
Reporting comprehensive income according to IFRS can be accomplished by each of the following methods except
A. in the statement of shareholders' equity
Reconciliation between net income and comprehensive income would include
C. Unrealized losses and unrealized gains on available for sale securities
Change statements include a
C. Cash flow statement, an income statement, and a retained earnings statement
In comparing the direct method with the indirect method of preparing the statement of cash flows:
A. Only operating activities are presented differently
The statement of cash flow reports cash flows from the activities of:
C. Financing, investing, and operatin
In the operating activities section of the statement of cash flows, we start with net income:
B. In the indirect method
Which of the following is added to net income as an adjustment under the indirect method of preparing the statement of cash flows?
C. Loss on sale of equipment
Schneider Inc. had salaries payalbe of 60000 and 90000 at the end of 2010 and 2011, respectively. During 2011, Schneider recorded 620000 in salaries expense in its income statement. Cash outflows for salaries in 2011 were:
Tropical Tours reported reveneue of 400000 for its year ended Dec 31, 2011. Accounts receivable at Dec 31, 2010 and 2011 were 35000 and 32000 respectively. Using the direct method for reporting cash flows from operating activities, Tropical Tours would report cash collected from customers of;
Shively Mfg. Co sold for 18000 equipment that cost 40000 and had a book value of 30000. Shively would report
D. Investing cash inflows of 18000
Arrow Printers paid 2000 interest on short-term notes payable, 10000 interest on longterm bonds, and 6000 in dividends on its common stock. Arrow would report cash outflows from activities, as follows
C. Operating: 12000, financing 6000
Hong Kong Clothiers reported revenue of 5000000 for its year ended Dec 31, 2011. accounts receivable at December 31, 2010 and 2011, were $320,000 and $355,000, respectively. Using the direct method for reporting cash flows from operating activities, Hong Kong Clothiers would report cash collected from customers of:
Lucia Ltd. reported net income of 135000 for the year ended Dec 31, 2011. jan 1 balances in accounts receivable and accounts payable were 29000 and 26000 respectively. Year-end balances in these accounts were 30000 and 24000 respectively. Assuming that all relevant information has been presented. Lucia's cash flows from operating activities would be:
Shady Lane's income tax payable account decreased from 14 million to 12 million during 2011. If its income tax expense was 80 million, what would be shown as an operating cash flow under the direct method?
D. A cash outflow of 82 million
Bird Brain Co reported net income of 45000 for the year ended Dec 31, 2011. Jan 1 balances in accounts receivable and accounts payable were were $23,000 and $26,000 respectively. Year-end balances in these accounts were $22,000 and $28,000, respectively. Assuming that all relevant information has been presented, Bird Brain's cash flows from operating activities would be:
Nevada Boot Co. reported net income of 216000 for its year ended Dec 31, 2011. Purchases totaled 152000. Accounts payable balances at the beginning and end of the year were $36,000 and $33,000, respectively. Beginning and ending inventory balances were $44,000 and $46,000, respectively. Assuming that all relevant information has been presented, Nevada Boot would report operating cash flows of:
Rowdy's Restaurant Cash Flow. Rowdy's would report net cash inflows from operating activities in the amount of
Expenses in an income statement prepared under IFrs
C. Can be classified either by function or by natural description
In a statement of cash flows prepared under IFRS, each of the following items is typically classified as a financing cash flow except
D. Dividends received
Jacobsen Corporation prepares its financial statement applying US GAAP. During its 2011 fiscal year, the company reported before-tax income of 620000. This amount does not include the following two items, both of which are considered to be material in amount
. Jacobsen Corporation prepares its financial statement applying International Financial Reporting Standards. During its 2011 fiscal year, the company reported before-tax income of $620,000. This amount does not include the following two items, both of which are considered to be material in amount:
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