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Test bank For Intermediate Accounting I - Exam 2 (11th Edition by David Spiceland)
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Test bank For Intermediate Accounting I - Exam 2 (11th Edition by David Spiceland)
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Test bank For Intermediate AccountingI - Exam 2 (11th Edition by David
Spiceland)
Which of the following would be more likely in multiple step income statement:
1. Total Expenses
2. Total Revenues & Gains
3. Operating Income - ANSOperating Income is most likely found in a multiple step income
statement
Item typically included in the income from continuing operations section of the income statement
is:
1. Discontinued operations
2. Restructuring costs
3. Prior period adjustment - ANSRestructuring costs are typically included in income from
continuing operations
The application of intraperiod income taxes requires that income taxes be apportioned to each
of the following items except:
1. Income from continuing operations
2. Operating income
3. Discontinued operations - ANSOperating Income would not be in this list
For a manufacturing company, each of the following items would be considered non operating
income for income statement purposes except:
1. Income from investments
2. Cost of Goods Sold
3. Interest expense
4. Gain on sale of investments - ANSCost of Goods Sold would not be considered nonoperating
income
Earnings per share should be reported for eaxch of the following income statement captions
except:
1. Income from continuing operations
2. Discontinued operations
3. Operating income
4. Net income - ANSOperating income is not included in earnings per share
Under GAAP, comparative financial statements are:
, 1. Required for at least the current and the prior year
2. Neither required nor recommended
3. Recommneded for at least the current and the prior year
4. Required for at least the current and the prior 2 years - ANSRecommended for at least the
current and the prior year
The effect of a material transaction that is infrequent in occurrence but not unusual in nature
should be presented separately as a componnent of income from continuing operatinos when
the transaction results in a - ANSTo be extraordinary it must be both, since this is just one,
should be put under income from continuing operations
Major distinction between multiple step and single step income statemetn is the separation of:
1. Income tax expense and administrative expenses
2. COGS expense and admn exp.
3. Selling expenses
4. Operating and nonoperating data - ANSOperating and nonoperating data, allows to see gross
profit or loss
One of the primary benefits of the multiple-step income statement over the single-step income
statement ist aht the multiple-step income statement:
1. Recognizes no distinciton among types of costs or expenses
2. Shows gross margin and recognizes different types of costs and expenses
3. Always shows last year's figures in comparison with the current year
4. Discrimination between admin & selling exp. - ANSShows gross margin and recognizes
different types of costs and expenses
Which of the following transactions qualifies as a discontinued operation:
1. Planned and approved sale of a segment
2. Phasing out of a production line
3. Changes realted to tech improvements
4. Disposal of part of a line of business - ANSPlanned and approved sale of a segment
Newt Co. sold a warehouse and used the proceeds to acquire a new warehouse. The excess of
the proceeds over the carrying amount of the warehouse sold should be reported as:
1. Extraordinary gain, net of taxes
2. Part of continuing operations
3. Reduction of the ocst of the new warehouse
4. Gain from discontinued operations, net of income taxes - ANSPart of continuing operations
The operating results of a discontinued operation are reported separately in the income
statement if - ANS1) a component of the entity has been disposed of or is classified as held for
sale
(2) its operations will be eliminated from the entity's operations
(3) the entity will have no significant continuing involvement after disposal.
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