Question : 84. A statement of stockholders’ equity discloses each of the following : 1229397

Accounting

84. A statement of stockholders’ equity discloses each of the following except:
A. The market value of the stockholders’ equity at the end of the year.
B. The cost of treasury stock owned at the end of the year.
C. Net income for the current year.
D. The amount of cash dividends declared during the current year.

85. Which of the following items would be included in comprehensive income but not reported as a component of net income?
A. A lower-of-cost-or-market write-down of inventory.
B. A material loss due to natural disaster.
C. An unrealized gain on the portfolio of available-for-sale marketable securities.
D. A gain on the sale of a segment of the business.

86. Which of the following items would be included in the discontinued operations section of the income statement?
A. Income or loss from operating the segment prior to its disposal.
B. The gain or loss on disposal of the segment.
C. Both the income or loss from operating the segment prior to its disposal, and the gain or loss on disposal of the segment.
D. Only losses and not gains on the disposal of a segment.

87. Family Fashions Corporation discontinued Kid-Choice, its entire line of children’s clothing, in November of 2009. Prior to the disposal, Kid-Choice generated a loss of $600,000 (net of tax) for the period from January through the sale date. Because of the value of the real estate and machinery, there was a gain of $850,000 (net of tax) on the actual sale. How should this situation be reported in the financial statements of Family Fashions for 2009?
A. A $250,000 gain should be included in the 2009 income statement as an extraordinary item.
B. A $600,000 loss should be included in income from operations and a $850,000 gain should be reported in the “discontinued operations” section of the income statement.
C. A $250,000 adjustment to beginning retained earnings should be in the statement of retained earnings.
D. A $250,000 gain should be in the “discontinued operations” section of the income statement.

88. Sovereign Foods suffered a $1,500,000 loss (net of tax) when the FDA prohibited the sale of food products containing red dye no. 3. On its other products, Sovereign Foods had net sales of $6,580,000 and costs and other expenses of $6,505,000. Which of the following statements is not true? (Ignore taxes)
A. Sovereign Foods reports a net loss of $1,425,000 for the current year.
B. Sovereign Foods reports income before extraordinary items of $75,000.
C. Sovereign Foods combines the $1,500,000 loss with its other costs and expenses of $6,505,000, since this item does not qualify for any special disclosure.
D. Sovereign Foods shows the $1,500,000 loss in a separate section of the income statement as an extraordinary item.

89. Corona Corporation’s financial statements for the current year include the following:

On the basis of this information, net income for the current year is:
A. $1,359,600.
B. $818,400.
C. $1,485,000.
D. $1,234,200.

90. During the year 2009, Tosco Corporation suffered an $800,000 loss when its factory was destroyed in a flood. Assuming the corporate income tax rate is 36%, what amount will Tosco report as an extraordinary loss on its income statement for 2009? Assume floods are not common in this area.
A. $800,000.
B. $512,000.
C. $288,000.
D. Nothing, since this does not qualify as an extraordinary item.

91. General Corporation was organized on January 1 and issued 500,000 shares of common stock on that date. On July 1, an additional 200,000 shares were issued for cash. Net income for the year was $5,184,000. Net earnings per share amounted to:
A. $7.41.
B. $7.98.
C. $8.41.
D. $8.64.

92. On January 1, 2009, Carleton Corporation had 55,000 shares of $6 par value common stock outstanding. On March 31, 2009, Carleton issued an additional 10,000 shares in exchange for a building. What number of shares will be used in the computation of basic earnings per share for the year 2009?
A. 55,000.
B. 65,000.
C. 62,500.
D. 62,000.

93. Platinum Company reports net income of $520,000 for 2009 and declared a cash dividend of $1 per share on each of its 100,000 shares of common stock outstanding. What are earnings per share for 2009?
A. $5.20 per share.
B. $1.00 per share.
C. $1.20 per share.
D. $4.80 per share.

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July 1, 2023

21. The percentage-of-sales procedure arises from the idea that uncollectible amounts will vary with the volume of credit business. The firm estimates the appropriate percentage by studying its own experience or by inquiring into the experience of similar firms. Default rates generally fall within the range of .01% to .02% of credit sales.

22. The percentage-of-completion method measures the proportion of total work carried out during the accounting period either from engineers' estimates of the degree of completion or from the ratio of costs incurred to date to the total costs expected for the entire contract.

23. A common-size income statement expresses each expense and net income as a percentage of
A. assets.
B. revenues.
C. liabilities.
D. expenses.
E. shareholders’ equity.

24. If the firm has received a promise of payment but cannot measure this promise with reasonable reliability,
A. U.S. GAAP would permit revenue to be recognized, but IFRS would not permit revenue to be recognized.
B. U.S. GAAP would not permit revenue to be recognized, but IFRS would permit revenue to be recognized.
C. neither U.S. GAAP nor IFRS would permit revenue to be recognized.
D. U.S. GAAP and IFRS would permit revenue to be recognized.
E. none of the above

25. Which section includes income derived from a firm’s primary business activities as well as from activities peripherally related to operations? (The firm expects these sources of earnings to continue.)
A. income from continuing operations
B. income, gains, and losses from discontinued operations
C. extraordinary gains and losses
D. retained earnings
E. paid-in-capital

26. Operating risks
A. include variability in sales from changing economic conditions (cyclicality risk).
B. include variability in sales from short product life cycles (because of technological change or changes in consumer taste).
C. include variability of earnings that arises when the firm has a high proportion of fixed costs that do not change as sales change.
D. Answers a, b, and c are correct.
E. None of these answer choices is correct.

27. Ulrich Co. sells an asset to a buyer for a total sales price of $6,000 with a payment schedule of $2,000 in year 1, $2,000 in year 2, and $2,000 in year 3. The cost of the asset is $5,000. Under the cost-recovery-first method, what amount of net profit is recognized in year 3?
A. $2,000
B. $1,000
C. $666.67
D. $333.33
E. $0

28. Which of the following is true regarding income recognition?
A. The seller must have substantially performed its obligations to the customer (for example, by transferring ownership of goods to the customer).
B. The seller must have obtained an asset from the customer that it can reliably measure. If the asset is not cash, the seller must be reasonably certain of converting it into cash.
C. The firm recognizes expenses when it consumes assets.
D. If an event or transaction leads to the recognition of revenue, the firm matches the consumption of any assets (the expense), in time, with the revenue recognized.
E. all of the above

29. Cowden Properties

Cowden Properties sold a condominium to Ms. Roberts for $90,000. Cowden originally acquired the condo at a cost of $40,000 and made improvements to the unit totaling $20,000. The contract for sale required Ms. Roberts to pay the $90,000 as follows: