Accounting Smartbook 3 and 4

To qualify as an operation for purposes of determining discontinued operations, which of the following must occur? (Select all that apply.)

A component of the entity has been sold, disposed of, or is held for sale. A strategic shift is represented that will have a major effect on financial results.

Accumulated other comprehensive income (AOCI) is found on what financial statement?

Balance sheet

In looking at earnings quality, analysts try to separate a company's __________earnings effects from its_______________ earnings. (Enter only one word per blank.)

Blank 1: temporary Blank 2: permanent

Sustainability Disclosures include (Select all that apply.)

Environmental Governance Social

The SEC requires disclosures on compensation for which of the following? (Select all that apply.)

Executives Directors

Where on the income statement is income tax expense reported?

In a separate line.

The purpose of the statement of cash flows includes which of the following? (Select all that apply.)

Provide information about cash receipts during a period. Provide information about cash disbursements during a period.

What is the role of the auditor's attest function?

To provide an opinion on the financial statements.

Which of the following are acceptable methods for reporting comprehensive income? (Select all that apply.)

Which of the following are acceptable methods for reporting comprehensive income? (Select all that apply.)

Which of the following is disclosed on the balance sheet?

accumulated other comprehensive income

Current include cash and other items that will be converted to cash or consumed within the coming year. (Enter only one word.)

assets

The potential tax expense or benefits of items reported as components of Other Comprehensive Income

can be shown separately for each item or aggregated and reported as one line item

U.S. GAAP requires that a statement of cash flows must be presented for

each period for which a balance sheet and income statement are prepared.

The evidence that a financial statement user or analyst might use as evidence to suggest that earnings have been smoothed is

earnings have a steady stream over time.

True or false: Income tax expense may be disclosed either on the income statement or in the notes to the financial statements.

false: : Income tax expense must be disclosed as a separate line item on the income statement.

Financial statements covering periods of less than one year are called _____________ reports

interim

Income smoothing describes the concept that

managers manipulate the pattern of income to not vary much between years.

What is the formula for the asset turnover ratio?

net sales/average total assets

In order to provide more complete information, U.S. GAAP allows that any significant noncash investing and financing activities may be reported (Select all that apply.)

on the face of the statement of cash flows. in the notes to financial statements.

Interim reports are typically issued

quarterly

Accounting changes made in an interim period are reported

retrospectively

The two approaches most commonly used to prepare an income statement are

single-step and multiple-step

Accumulated other comprehensive income represents

the total of other comprehensive income to date.

Basic earnings per share is calculated as net income available to common shareholders divided by

weighted average common shares outstanding.

How are discontinued operations and unusual items treated in interim financial statements under U.S. GAAP?

The full amount should be separately reported in the period in which the discontinued operation or unusual item occurs.

Which of the following financial statements shows a firm's financial position on a particular date?

balance sheet

Some_____________recognition is modified in interim reporting to cause interim statements to relate better to annual statements. (Enter only one word.)

expense

The guidance on discontinued operations defines a discontinued operation as a component that either/or (Select all that apply.)

is classified as held for sale has been sold

If discontinued operations have a Blank______ effect on the income statement, they must be reported separately.

material

Shareholders' equity is composed of which of the following accounts? (Select all that apply.)

paid-in capital retained earnings

An inflow of resources resulting from providing goods or services to customers is a(n) Blank______.

revenue

Which of the following items are reported as components of operating income for most manufacturing and merchandising companies? (Select all that apply.)

revenues selling expenses administrative expenses

Which of the following items are included in calculating operating income? (Select all that apply.)

revenues related to primary revenue-generating activities expenses related to primary revenue-generating activities

SEC requirements provide for disclosures on executive and director compensation, particularly concerning ____________options. (Enter only one word.)

stock

Reports that communicate the environmental, social, and governance factors of an organization's activities are called:

sustainability reports

When an accounting change occurs during an interim period, the change is applied retrospectively. In subsequent interim periods of the same fiscal year, which of the following are disclosed? (Select all that apply.)

Affect on related per share amounts. Affect on net income. Affect on income from continuing operations.

What does a liability represent?

Obligations owed to other entities

Profit margin on sales, return on assets, and return on shareholders' equity are commonly used ________ ratios. (Enter only one word.)

Profitability

The ability of reported earnings to predict a company's future earnings is referred to as earnings

quality

True or false: Net income is a portion of comprehensive income.

true

Revenues, expenses, gains, losses, and income tax related to a(n)_________________ _________________ must be removed from continuing operations and reported separately on the income statement. (Enter only one word per blank.)

Blank 1: discontinued or discontinuing Blank 2: operation or operations

Current assets include which of the following? (Select all that apply.)

Cash Short term investments

Computations for EPS for interim reports under U.S. GAAP are based on what?

Conditions actually existing during the particular interim period.

Which of the following are commonly used to assess a company's profitability?

Profit margin on sales Return on assets Return on equity

What items must be removed from continuing operations and reported separately for a discontinued operation? (Select all that apply.)

Revenues expenses gains tax expense

When an expense benefits more than just the period in which it is incurred, how is the expense treated under U.S. GAAP?

The expense should be allocated among the periods benefited.

How are discontinued operations reported? (Select all that apply.)

With separate reporting of the tax effect on the item of discontinued operations. Below income from continuing operations. As a separate line item on the income statement.

The purpose of the balance sheet is to report

a company's financial position on a specific date.

In a balance sheet, how are assets classified?

current and noncurrent

The two classifications used for assets and liabilities on the balance sheet are Blank______ and Blank______.

current; noncurrent

The treatment of discontinued operations and unusual items in interim reporting under U.S. GAAP is more consistent with the Blank______ view.

discrete

Shareholders' equity arises primarily from amounts invested by shareholders and amounts Blank______.

earned by the corporation

Which type of activities involve cash inflows and outflows from transactions with creditors and owners?

financing

The classifications on the statement of cash flows are cash flows from (Select all that apply.)

financing activities. investing activities. operating activities.

Obligations to other entities are known as what?

liabilities

In calculating basic earnings per share, Blank______ is divided by the weighted average common shares outstanding

net income less any preferred stock dividends