1.3 INCOME STATEMENT AND STATEMENT OF COMPREHENSIVE INCOME

These must be presented in a separate section after income from continuing operations if an entity has any.

Discontinued/extraordinary operations

True or False No judgement or estimates from management are required in preparation of the balance sheet or income statement.

False

True or False. The effective portion of a gain or loss on a hedging instrument in a cash flow hedge is not included in OCI.

False

True or False COGS for Retailer = Beg Inv + Purchases + End Inv

False. COGS = Beg Inv + Purchases - End Inv

True or False The disposal of a component included in discontinued operations / extraordinary items does not include a gain or loss.

False. A gain or loss is included

True or False Translation revenues and expenses for financial statements of foreign operations are included in OCI.

False. Gains and Losses are, not expenses and revenues.

True or False. All items of comprehensive income must be recognized for the period in one continuous financial statement that has two sections - Net Income and OCI.

False. It can also be recognized on two separate but consecutive statements. The first statement has net income and the second statement has OCI.

True or False. All expenses and revenues are reported on the Income statement.

False. Some may be reported on the Statement of Other Comprehensive Income

True or False A single step income statement matches operating revenues and expenses in a section separate from non operating items.

False. This is the definition for Multi-step income statement

Define the matching principle

Match expenses to revenues. (Cause and effect)

These transactions are not included in income: 1) Transactions with owners 2) Prior-period adjustments (such as error correction or a change in accounting principle) 3) Items reported initially in other comprehensive income 4) Transfers to and from appropriated retained earnings

True

True of False. Statement of Other Comprehensive Income includes all changes in equity (net assets) except investments by and distributions to owners.

True

True of False: In order for items to be qualified or classified as Discontinued/extraordinary operations they must two criteria: 1) Unusual in nature 2) Infrequent in occurrence

True

True or False COGS for Manufacturer = Beg Inv + COGM - End Inv

True

True or False Certain amounts associated with accounting for defined benefit post retirement plans are included in OCI.

True

True or False Difference between COGS formula for Retailer and Manufacturer is COGM vs Purchases

True

True or False Income or Loss from operations of a discontinued / extraordinary item is included when reporting.

True

True or False. Discontinued operations are shown net of tax and after items from continuing operations.

True

True or False. Gains and (losses) are increases and (decreases) in equity.

True

True or False. The single-step income statement provides one grouping for revenue items and one for expense items.

True

True or False. Unrealized holding gains and losses due to changes in the fair value of available-for-sale securities are included in OCI.

True

True or False. Revenue, Expenses, Gains, & Losses are temporary / nominal accounts.

True. Revenue and Expenses are closed to retained earnings, for example.