Acct301 Ch. 4 MC

Which of the following items would be reported net of tax on the face of the income statement? Change in estimates related to allowance for doubtful accounts Unusual gain Discontinued operations Prior period adjustment

Discontinued operations

Which of the following earnings per share figures must be disclosed on the face of the income statement? EPS for gross profit. EPS for income before taxes. EPS for income from continuing operations. The effect on EPS from unusual items.

EPS for income from continuing operations.

The single-step income statement emphasizes the various components of income from continuing operations. the gross profit figure. operating and non-operating expenses. total revenues and total expenses.

total revenues and total expenses.

Which of the following is not an acceptable method of presenting the income statement? A consolidated statement of income. A multiple-step income statement. A partial statement of income. A single-step income statement.

A partial statement of income.

Which of the following is true of accounting for changes in estimates? A company accounts for changes in estimates only in the period of change, even though it affects the future periods. Changes in estimates are not carried back to adjust prior years. Changes in estimates are treated as errors. A company recognizes a change in estimate by making a retrospective adjustment to the financial statements.

Changes in estimates are not carried back to adjust prior years.

Which of the following is a required disclosure in the income statement when reporting the disposal of a component of the business? Earnings per share from continuing operations, discontinued operations, and net income should be disclosed on the face of the income statement. The gain or loss on disposal should be reported as an unusual gain or loss. The gain or loss on disposal should not be segregated, but should be reported together with the results of continuing operations. Results of operations of a discontinued component should be disclosed immediately before income from continuing operations.

Earnings per share from continuing operations, discontinued operations, and net income should be disclosed on the face of the income statement.

Which of the following is an advantage of the single-step income statement over the multiple-step income statement? It matches costs and expenses with related revenues. It does not imply that one type of revenue or expense has priority over another. It reports gross profit for the year. Expenses are classified by function.

It does not imply that one type of revenue or expense has priority over another.

Which of the following is false about an income statement? It is used to measure the solvency of a company. Income measurement involves judgment. Income numbers are affected by the accounting methods employed. Items that cannot be measured reliably are not reported in the income statement.

It is used to measure the solvency of a company.

A correction of an error in prior periods' income will be reported. In the income statement Net of tax Yes Yes No Yes No No Yes No

No Yes

Which of the following is not a selling expense? Advertising expense Office salaries expense Freight-out Store supplies consumed

Office salaries expense

Where must earnings per share be disclosed in the financial statements to satisfy generally accepted accounting principles? On the face of the income statement. On the face of the balance sheet. In the footnotes to the financial statements. On the face of the statement of retained earnings (or, statement of stockholders' equity.)

On the face of the income statement.

Which of the following is included in comprehensive income? Changes in accounting principles. Distributions to owners. Investments by owners. Unrealized gains on available-for-sale securities.

Unrealized gains on available-for-sale securities.

A change in accounting principle requires that the cumulative effect of the change for prior periods be shown as an adjustment to: comprehensive income for the earliest period presented. stockholders' equity of the period in which the change occurred. net income of the period in which the change occurred. beginning retained earnings of the earliest period presented.

beginning retained earnings of the earliest period presented.

Earnings per share should always be shown separately for income from continuing operations. discontinued operations items and prior period adjustments. net income and gross margin. net income and pretax income.

income from continuing operations.

The income statement reveals resources and equities of a firm for a period of time. net earnings (net income) of a firm at a point in time. resources and equities of a firm at a point in time. net earnings (net income) of a firm for a period of time.

net earnings (net income) of a firm for a period of time.