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INTERMEDIATE ACCOUNTING I - EXAM #2 QUESTIONS WITH CORRECT ANSWERS
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INTERMEDIATE ACCOUNTING I - EXAM #2 QUESTIONS WITH CORRECT ANSWERS
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INTERMEDIATE ACCOUNTING I - EXAM#2 QUESTIONS WITH CORRECT
ANSWERS
Which of the following would be more likely in multiple step income statement:
1. Total Expenses
2. Total Revenues & Gains
3. Operating Income - Answer-Operating 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 - Answer-Restructuring 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 - Answer-Operating 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 - Answer-Cost 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 - Answer-Operating 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 - Answer-Recommended 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 - Answer-To 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 - Answer-Operating 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. - Answer-Shows 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 - Answer-Planned 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 - Answer-Part of continuing
operations
The operating results of a discontinued operation are reported separately in the income
statement if - Answer-1) 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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