Chapter 4: Income Statement and Related Information Q – Flashcards
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Investors and creditors can use the information in the income statement to..
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-Evaluate the past performance of the enterprise -Provide a basis for predicting future performance -Help assess the risk or uncertainty of achieving future cash flows
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Expenses include all of the following except..
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Loss on sale of investments
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In the single-step income statement..
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Just two groupings exist - revenues and expenses
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A separation of operating and non-operating activities of a companay exists in..
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A multiple-step but not a single-step income statement
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Irregular transactions such as discontinued operations and extraordinary items should be reported separately in..
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Both a single-step and multiple-step income statement
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The gain or loss from disposal of a segment of a business is shown as a(n)
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Part of discontinued operations
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All of the following would meet the criteria for an extraordinary item except gains or losses from..
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Exchange or translation of foreign currencies
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A change in depreciation from the double-declining to the straight-line method would be accounted for as a(n)
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Change in accounting principle
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Intraperiod tax allocation is used for all of the follwing except..
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Unusual gains/losses
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Which of the following statements related to extraordinary items and intraperiod tax allocation is correct?
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Both extraordinary gains and losses are reported less apllicable income tax
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Earnings per share is computed as net income..
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Minus preferred dividends divided by the weighted average of common shares of outstanding
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Earnings per share is not reported for..
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Unusual gains/losses
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Prior period adjustments are reported as..
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An addition to (or a deduction from) the beginning balance or retained earnings
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Gains and losses that bypass net income but affect stockholders' equity are referred to as..
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Other comprehensive income
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The FASB decided that the components of other comprehensive income must be displayed..
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-In a second separate income statement -In a combined income statement of comprehensive income -As a part of the statement of stockholders' equity
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(T/F) Income measurement is based on the transaction approach
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True
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(T/F) The single-step income statement differentiates between operating and non-operating activities
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False
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(T/F) Irregular items, such as extraordinary items, should be reported separately following income from continuing operations
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True
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(T/F) Extraordinary items must be both unusual in nature and infrequent in occurrence
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True
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(T/F) Earnings per share (EPS) is calculated on both common and preferred stock
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False
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The limitations of the income statement include..
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-Items that cannot be measured reliably are not reported -Income numbers that are affected by the accounting method used -Income measurement involves judgment
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Which of the following occur from peripheral or incidental transactions?
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Gains
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Decreases in net assets from peripheral or incidental transactions occur from..
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Losses
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Which of the following highlights the difference between regular and irregular activities?
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Income from operations
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Which of the following is not included in the operating section of a multiple-step income statement?
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Income tax expense
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Which of the following is not considered an irregular item on the income statement?
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Earnings per share
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Which of the following items are not reported net of their applicable taxes?
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Unusual gains and losses
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The effect of a change in accounting principle is disclosed on the income statement..
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NONE OF THE LISTED -before income from operations -before discontinued operations -before extraordinary items
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Changes in estimate are not..
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-considered prior period adjustments -handled retroactively -considered extraordinary items
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Relating income taxes to specific items on the income statement to provide more informative disclosure to statement users is called..
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Intraperiod tax allocation
