Accounting Chapter 4

Companies have considerable flexibility in reporting income from ____, but the reporting of income from ____ operations is strictly mandated. (Enter only one word per blank.)

Blank 1: continuing, continued, or continuous Blank 2: discontinued or discontinuing

Statement of operations and statement of earnings are additional titles for the

Income Statement

The inflows and outflows of cash that result from activities reported in the income statement are classified as cash flows from ___activities.

Operating

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

administrative expenses revenues selling expenses

The type of activities related to the external financing of the company are _____ activities.

financing

The statement of cash flows is useful because (select all that apply)

it provides information about liquidity it reveals the company's ability to generate positive cash flow from its normal operations

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

revenue

Which of the following are acceptable methods of presenting the income statement? (Select all that apply.)

-Single-step format -Multiple-step format

If a component of the business qualifies for discontinued operations treatment, which of the following statements are true? (Select all that apply.)

-The tax expense effect is removed from continuing operations. -All related revenues, expenses, gains, and losses must be removed from continuing operations.

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

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

False

Inflows and outflows of cash related to the acquisition and disposition of long-lived assets used in operations and investment assets are what type of cash flow?

Investing

Where are the elements of net income found on a cash basis rather than an accrual basis?

Operating activities section of the statement of cash flows

The statement of cash flows is useful because

accrual-based income is not an indication of cash flows

Separate reporting as a(n) ______ operation is required when the disposal of a component represents a strategic shift that has, or will have, a major effect on a company's operations and financial results. (Enter only one word.)

discontinued

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 _____ effect on the income statement, they must be reported separately.

material

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

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

Which of the following terms is also used as a heading for an income statement?

Statement of Operations

Significant noncash investing and financing activities are disclosed because they

provide more complete information.