Question : 21.On the income statement, unusual OR infrequent income events found : 1241756

 

 

21.On the income statement, unusual OR infrequent income events are found in

a. operating revenues and expenses.

b. other revenues or expenses.

c. disposal of a business segment.

d. extraordinary gains or losses.

e. cumulative effects.

 

 

 

22.Which one of the following is true about earnings per share?

a.Must be calculated as earnings per ‘preferred’ share

b.Must be calculated as earnings per ‘common’ share

c.May be increased or decreased because of outstanding stock options or convertible debt

d.Appears with the gross profit percentage on the income statement

 

 

23.Below are five categories of transaction.  Generally accepted accounting principles consider which of these as financing transactions?

 

1.Purchases, sales, and exchanges of assets

2.Exchanges with shareholders

3.Operating transactions like revenues and expenses

4.Exchanges of liabilities and shareholders’ equity

5.Issues and payments of debt

 

a. 1 only.

b. 3, 4, and 5.

c. 1,2, and 3.

d.2,4,and 5.

 

 

 

24.Which one of the following should be NOT reported net of income taxes?

a.Loss from early extinguishment of long-term debt

b.Cumulative adjustments resulting from a change in depreciation methods

c.Bad debt expense associated with a bankrupt customer

d.Gains or loss from discontinuing the operations of a major segment of a business

 

 

 

25.Which one of the following transactions or events is never treated as an extraordinary item?

a.Losses from the early extinguishment of long-term bonds

b.Losses from flooding in locations where flooding is uncommon and has never occurred before

c.Operating losses from the discontinued segment of a business

d.Losses from volcanic eruptions in Kansas

 

 

 

26.Mountain Corp. experienced the following events and transactions during 2010:

1 = Dividends declared and paid to Mountain’sshareholders

2 = Cumulative change from FIFO to average cost of inventory

3 = Gain on disposal of a major segment of the business

4 = Depreciation expense

5 = Gain from early debt retirement

Using the numbers of the events and transactions, identify which of the following sequences is the correct order for presenting the items on the income statement.

a.5, 1, 3, 2

b.4, 3, 5, 2

c.4, 5, 2, 3

d.1, 4, 3, 5, 2

 

 

 

27.Management of Walker Corporation chose to classify its major losses as extraordinary items. Managers might be biased toward this approach because

a.investors do not use extraordinary items when predicting future performance.

b.this treatment reduces income taxes.

c.extraordinary losses are considered a good predictor of the company’s future solvency.

d.extraordinary losses bypass net income and are reported directly as part of comprehensive income.

 

 

 

28.If a loss is unusual in nature but not infrequent in occurrence, the loss should be disclosed

a.as an extraordinary item, net of taxes.

b.in the footnotes.

c.as a separate component of income from continuing operations.

d.as a separate item after the extraordinary items, net of taxes.

 

 

 

29.Carman, Inc. properly reported a change in accounting principle during 2009. This company must

a.have violated GAAP by not applying accounting principles consistently.

b.have convinced its auditors that the environment in which it operates has changed and another method is more appropriate.

c.be trying to cover up accounting errors.

d.have initially used the wrong method.

 

 

 

30.Publicly held companies must disclose earnings per share for all of the following except for

a.income from continuing operations.

b.losses from discontinued segments of a business.

c.other revenue and expense items.

d.cumulative effects resulting from changes in accounting principles.