Question :
31. Other (nonoperating) items follow operating expenses or the subtotal for : 1230555
31. Other (nonoperating) items follow operating expenses or the subtotal for operating profit. Most firms reporting under U.S. GAAP separately report financing costs, such as
A. principal payments
B. interest revenue
C. interest expense
D. principal receipts
E. none of the above
32. A firms decision to sell its headquarters building at a gain
A. would increase income in the year of sale.
B. is not part of the core business.
C. would be aggregated with other noncore, nonoperating items
D. reported below operating income, probably as Other Income
E. all of the above
33. Subtracting nonoperating expenses from operating income yields:
A. income tax expense
B. profit before income taxes
C. net income
D. gross profit
E. none of the above
34. U.S. GAAP and IFRS require separate income statement display of income from continuing operations and _____earnings that will not continue because the firm either sold, or made a decision to sell, a portion of its business). Such a requirement aids users of the income statement in predicting future earnings.
A. income from discontinued operations
B. extraordinary items
C. changes in accounting principles
D. sale of individual assets
E. none of the above
35. Research shows that the largest category of restated financial statements in the U.S. relates to
A. assets
B. liabilities
C. shareholders’ equity
D. revenues
E. expenses
36. Revenue recognition is among the most complex issues in financial reporting. Currently, U.S. GAAP contains over _____ pieces of authoritative guidance for recognizing revenues.
A. 25
B. 50
C. 100
D. 150
E. 200
37. Revenue recognition is among the most complex issues in financial reporting. The quantity and complexity of the authoritative guidance for recognizing revenues result from
A. misreporting of revenues
B. reporting revenues before the firm earns them
C. reporting nonexistent revenues
D. firms bundling products and services and selling them in multiple-element arrangements
E. all of the above
38. A firm sells its headquarters building at a gain. This means that at the time of sale
A. the cash or other assets received were greater than the building’s book value
B. the cash or assets received in a transaction were less than the carrying value of the assets given up
C. the cash or other assets received were greater than the building’ carrying value
D. the cash or assets received in a transaction were less than the building’s book value
E. choices a and c are correct
39. As a general principle, under the accrual basis of accounting, the firm recognizes revenue when the transaction meets which of the following conditions?
A. completion of the earnings process, only
B. receipt of assets from the customer, only
C. completion of the earnings process and receipt of assets from the customer
D. expiration of the warranty period, only
E. receipt of the final payment, only
40. Which of the following is/are true?
A. The seller measures revenue as the amount of cash, or the cash-equivalent value of other assets, that it receives from customers.
B. The seller measures revenue amounts as the exchange price between buyer and seller at the time of sale.
C. If the firm has not performed all of its obligations, it may make adjustments in the form of sales discounts and allowances.
D. If the firm has not performed all of its obligations, it may make adjustments in the form of sales returns.
E. all of the above are true
