ACC 301: Chapter 5 (theory)

The income statement may be used to do all of the following except:

An income statement provides information that is useful

Which of the following would not be found on a single-step income statement?

Which of the following make up cost of goods sold?

Basic earnings per share (EPS) is computed as

Basic earnings per share (EPS) is used by investors and analysts in evaluating

Which of the following is not an element of the income statement?

When should revenues be recognized?

The three major sections of the statement of cash flows are:

Using the indirect method, depreciation expense would appear on the statement of cash flows

Which of the following would not appear in the financing activities section of the statement of cash flows?

[blank_start]Comprehensive income[blank_end] is the change in equity of a company during a period from transactions, other events, and circumstances relating to nonowner sources.

[blank_start]Net income[blank_end] is measured as revenues - expenses + gains - losses.

[blank_start]Expenses[blank_end] measure and report the efforts or sacrifices made to conduct business activities.

Management's salaries and most selling and administrative costs are recognized using the [blank_start]immediate recognition[blank_end] principle because the costs provide no discernible future benefits.

Which of the following items are included in a company's operating income?

[blank_start]Interperiod tax allocation[blank_end] involves allocating a corporation's total income tax obligation as an expense across various accounting periods because of temporary (timing) differences between its taxable income and pretax financial income.

[blank_start]Intraperiod tax allocation[blank_end] is necessary to give a fair presentation of the after-tax impact of the major components on net income and retained earnings. The portion of the income tax expense applicable to results from discontinued operations and each extraordinary item is [blank_start]disclosed parenthetically[blank_end] or [blank_start]in a note[blank_end] to the financial statements.

Which of the following items are included in a company’s results from discontinued operations? I. Gain or loss on the sale of the discontinued component. II. Income or loss from the operations of a discontinued component

A loss from the write-down of obsolete inventories [blank_start]is not deemed an extraordinary item[blank_end] and is reported on the income statement as a component of income from continuing operations.

In its most basic form, earnings per share is computed by dividing the [blank_start]net income[blank_end] available to [blank_start]common shareholders[blank_end] by the weighted average number of [blank_start]common shares[blank_end] outstanding throughout the year. Diluted earnings per share takes into account potentially dilutive contingent claims on equity.

Currently, under U.S. GAAP, which of the following items are excluded from a company's other comprehensive income?

Differences between IFRS and U.S. GAAP in regard to a company's presentation and content of the income statement include all of the following except:

What are the three determinants of a company's rate of return on common equity?

[blank_start]Rate of change analysis[blank_end] enables users to identify which items on the income statement are growing quickly or slowly over time.

The [blank_start]gross profit margin[blank_end] indicates a company's ability to generate revenues and control the costs of producing and delivering its products and services.

Under the indirect method, the net cash provided by operating activities is determined by reporting net income first, then adjusting net income by [blank_start]adding back amortization expense[blank_end].

In which section of the cash flow statement will the following transactions appear? 1. Purchases of goods for sale [blank_start]Operating activity[blank_end] 2. Repayment of loan [blank_start]Financing activity[blank_end] 3. Purchase and sale of fixed assets, eg. plant [blank_start]Investing activity[blank_end]

When used with a company's other financial statements, the statement of cash flows helps external users assess all of the following except:

The primary purpose(s) of a statement of cash flows is to:

What of the following alternatives does a company have for reporting its comprehensive income under U.S. GAAP and IFRS? I. Present net income in the income statement and present comprehensive income in a separate, but consecutive, statement of comprehensive income. II. Present net income in the income statement and present comprehensive income in a footnote to the financial statements. III. Present net income and comprehensive income in a single continuous performance statement.

Currently, under U.S. GAAP, which of the following items are excluded from a company's other comprehensive income?

A loss from the write-down of obsolete inventories [blank_start]is not[blank_end] deemed an extraordinary item and is reported on the income statement as a component of income from continuing operations.