아쎄테제305 중간2

A prior period adjustment requires an adjustment to 1. the income statement in the current year. 2. the beginning balance of retained earnings. 3. net income in the current year and future years. 4. the ending balance of other comprehensive income.

2. the beginning balance of retained earnings.

When calculating profitability ratios, analysts often adjust net income by adding in cash flows. adding in one-time losses. excluding transitory earnings effects. subtracting out one-time gains.

adding in one-time losses. excluding transitory earnings effects. subtracting out one-time gains.

A change in the residual value of a depreciable asset is treated as a change in accounting ______

estimate

An ______ loss is reported if a discontinued operation is held for sale and the book value of the assets is more than the fair value minus cost to sell.

impairment

외우기) Which of the following is a category of accounting change?

1. A change in an accounting principle 2. A change in estimate 3. A change in entity

A discontinued operation is reported when a ______ of an entity either (a) has been disposed of or (b) is classified as held for sale.

component

The accounting treatment required for a material error in financial statements that have already been issued is to account for the error prospectively in the financial statements. restate the financial statements of the previous periods affected. correct the error in the current year and in future years.

restate the financial statements of the previous periods affected.

Which of the following is a category of accounting change?: 1. Accounting structure 2. Accounting principle 3. Liability classification 4. Asset classification

2. Accounting principle

When a company discovers an immaterial error in a year subsequent to the year the error is made, what is the proper course of action? 1. Ignore the error. 2. Correct the error in the year discovered and include a note to the financial statements. 3. Correct the error in the year discovered.

3. Correct the error in the year discovered.

Where on the income statement is income tax expense reported?: 1. In other comprehensive income. 2. In other expenses. 3. In extraordinary gains and losses. 4. In a separate line.

4. In a separate line.

Categorizing operating expenses as non-operating expenses is an example of: 1. unauthorized income recognition. 2. channel stuffing 3. an illegal act. 4. income statement classification shifting.

4. income statement classification shifting.

Which of the following is computed by dividing income available to common shareholders by the weighted-average number of common shares outstanding? Price to earnings Diluted earnings per share Return on equity Basic earnings per share

Basic earnings per share

Income tax expense may be disclosed either on the income statement or in the notes to the financial statements. 1. True 2. False

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

Which of the following items are classified as cash outflows from operating activities on the statement of cash flows? (Select all that apply.) issuance of bonds Payment of salaries purchase of building payment on accounts payable purchase of supplies on account

Payment of salaries payment on accounts payable

The statement of cash flows is useful because accrual-based income is not an indication of cash flows. it is prepared on an accrual basis. it is more accurate in measuring net income for the period. it provides more accurate information than the balance sheet.

accrual-based income is not an indication of cash flows.

Investing activities involve the acquisition and sale of (Select all that apply.) long-lived assets used in business operations. nonoperating investment assets. inventories sold in normal operations.

long-lived assets used in business operations. nonoperating investment assets.

Under IFRS, if the revaluation option is chosen, the excess of the fair value of property, plant and equipment over its book value is reported as Blank 1Blank 1 other, Correct Unavailable Blank 2Blank 2 comprehensive, Correct Unavailable Blank 3Blank 3 income, Correct Unavailable.

other comprehensive income

If a causal relationship cannot be established between revenues and expenses, which of the following occurs?: 1. Allocate the expense over several periods. 2. Record the expense as incurred. 3. Match the revenue with the expense. 4. Relate the expense to a particular period.

1. Allocate the expense over several periods. 3. Match the revenue with the expense. 4. Relate the expense to a particular period.

Which of the following situations qualifies for treatment as a change in accounting principle? (Select all that apply.) 1. Change from aging method to percent-of-credit sales method for bad debts. 2. Change in revenue recognition methods. 3. Change in inventory methods. 4. Change to a new standard issued by the FASB.

1. Change from aging method to percent-of-credit sales method for bad debts. 3. Change in inventory methods. 4. Change to a new standard issued by the FASB.

Where are the elements of net income found on a cash basis rather than an accrual basis? Investing activities section of the statement of cash flows Operating activities section of the statement of cash flows In the statement of operations In the statement of earnings

Operating activities section of the statement of cash flows

The type of income statement that does not classify items as operating and nonoperating is the ______ income statement.

Single-step

Companies have considerable flexibility in reporting income from ______ operations, but the reporting of income from ______ operations is strictly mandated.

continuing discontinued

Margot Company prepares its financial statements consistent with IFRS. The company chose the revaluation method for valuing its equipment. The company will report revaluation surplus if the equipment's book value exceeds its fair value fair value exceeds its book value fair value is equal to its book value

fair value exceeds its book value

The statement of cash flows is useful because (select all that apply) it reveals the company's ability to generate positive cash flow from its normal operations it provides information about liquidity it provides a more accurate prediction of the company's ability to generate future cash flows than income does

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

An income statement that classifies items and uses subtotals for gross profit, operating income, and income from continuing operations is called a ______ income statement.

multi-step

Earnings quality refers to: 1. the strength of the regression model used to analyze earnings. 2. the historical earnings of the company. 3. the earnings score assigned by a financial analyst. 4. the ability of reported earnings to predict future earnings.

4. the ability of reported earnings to predict future earnings.

Which of the following is required to correct a material error in the financial statements? (Select all that apply.) Include a disclosure note explaining the impact of the error on income. Restate the financial statements of all years presented. Treat the change on a prospective basis in the current and future years. Adjust the beginning balance in retained earnings for the earliest period presented. Recalculate the amounts as if the error had not occurred and correct retained earnings in the current year.

Correct Answer Include a disclosure note explaining the impact of the error on income. Restate the financial statements of all years presented. Adjust the beginning balance in retained earnings for the earliest period presented.

Activity ratios measure the solvency of a company. the profitability of a company. a company's efficiency in using its assets. the liquidity of a company.

a company's efficiency in using its assets.

The potential tax expense or benefits of items reported as components of Other Comprehensive Income must be presented separately for each item must be aggregated for all items and reported as one line item can be shown separately for each item or aggregated and reported as one line item

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

In looking at earnings quality, analysts try to separate a company's ______ earnings effects from its ______ earnings.

1. temporary 2. parmanent

If a component of the business qualifies for discontinued operations treatment, which of the following statements are true?: 1. All related revenues, expenses, gains, and losses must be removed from continuing operations. 2. The tax expense effect is removed from continuing operations. 3. Revenues and expenses are reported in continuing operations, but gains and losses are reported as discontinued operations. 4. Revenue from the discontinued operations is listed immediately below revenue in the operating section of the income statement.

1. All related revenues, expenses, gains, and losses must be removed from continuing operations. 2. The tax expense effect is removed from continuing operations.

Which of the following is a routine change in estimate that does not require a disclosure note if the amount is not material?: 1. Change in depreciation method. 2. Change in estimate for uncollectible accounts. 3. Change in depreciable lives. 3. Change in revenue recognition method.

2. Change in estimate for uncollectible accounts. 3. Change in depreciable lives.

Which of the following items are included in calculating operating income?: 1. revenues related to peripheral activities 2. expenses related to primary revenue-generating activities 3. revenues related to primary revenue-generating activities 4. expenses related to peripheral activities

2. expenses related to primary revenue-generating activities 3. revenues related to primary revenue-generating activities

The correction of a material error in the prior year's financial statements is considered a 1.change in accounting principle. 2. prior period adjustment. 3. change in reporting entity. 4. change in accounting estimate.

2. prior period adjustment.

Which of the following is required to be disclosed on the face of a public company's income statement? Goodwill Return on equity Earnings per share Return on investment

Earnings per share

U.S. GAAP requires that a statement of cash flows must be presented for every reporting period to date. each period for which a balance sheet and income statement are prepared. each period in which an income statement is not prepared.

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

Profitability, as measured by return on assets, can be achieved by (select all that apply) high asset turnover high profit margin increasing total assets

high asset turnover high profit margin

The majority of errors discovered are not ______ and are corrected in the year discovered.

material

Which of the following situations qualifies for treatment as a change in accounting principle?: 1. Change from percent-of-completion to completed contract method. 2. Change from direct write-off method to allowance method. 3. Change from aging method to percent-of-credit sales method for bad debts. 4. Change from LIFO to FIFO.

1. Change from percent-of-completion to completed contract method. 4. Change from LIFO to FIFO.

Which of the following are changes in accounting estimates?: 1. Changing the estimate for future warranty expenses. 2. Changing the bad debt estimate. 3. Changing the useful life of an asset. 4. Changing inventory methods.

1. Changing the estimate for future warranty expenses. 2. Changing the bad debt estimate. 3. Changing the useful life of an asset.

When a component that qualifies as a discontinued operation is held for sale, what are the two elements that may be reported in discontinued operations? 1. Estimated impairment loss expected from the sale of the component. 2. Revenues and expenses related to the component. 3. Operating income or loss of the component during the reporting period. 4. Estimated gain from sale of the component.

1. Estimated impairment loss expected from the sale of the component. 3. Operating income or loss of the component during the reporting period.

Revenues, expenses, gains, and losses that will likely continue in future periods make up what?: 1. Income from continuing operations 2. Income from discontinued operations 3. Gross revenue 4. Gross margin

1. Income from continuing operations

When a component classified as a discontinued operation is sold, what two elements are included in calculating the total gain or loss from discontinued operations displayed on the income statement? 1. Operating income or loss for the period and gain or loss on disposal. 2 Extraordinary loss on the sale of the asset and the related tax benefit. 3. Revenues and expenses of the component.

1. Operating income or loss for the period and gain or loss on disposal.

If a discontinued operation is held for sale and there is an impairment loss, what are the acceptable methods for disclosing the impairment loss?: 1. Parenthetically on the face of the income statement in discontinued operations. 2. As a disclosure note in the notes to the financial statements. 3. Parenthetically below fixed assets on the balance sheet. 4. In the Management Discussion and Analysis section of the annual report.

1. Parenthetically on the face of the income statement in discontinued operations. 2. As a disclosure note in the notes to the financial statements.

The purpose of the statement of cash flows includes which of the following? (Select all that apply.) 1. Provide information about cash disbursements during a period. 2. Provide information about cash disbursements on a specific date. 3. Provide information about cash receipts during a period. 4. Provide information about cash receipts on a specific date.

1. Provide information about cash disbursements during a period. 3. Provide information about cash receipts during a period.

The three types of accounting changes are a change in accounting principle. 1. corporate structure. 2. reporting entity. 3. fiscal years. 4. accounting estimate.

1. corporate structure. 2. reporting entity. 4. accounting estimate.

A change in accounting principle is a change: 1. from one acceptable accounting method to another. 2. in estimating valuation accounts. 3. in the corporation's reporting structure. 4. in the composition of companies in the corporation.

1. from one acceptable accounting method to another.

When a discontinued operation is sold before the end of the reporting period, the income or loss from operations and the ______ or ______ on the disposal of assets is included in the reported income.

1. gain 2. loss

Which of the following are acceptable methods for reporting comprehensive income? (Select all that apply.) 1. in one single statement of shareholders' equity 2. in two consecutive statements - income statement and comprehensive income statement 3. in one single statement of comprehensive income 4. in two consecutive statements - income statement and shareholders' equity statement

1. in two consecutive statements - income statement and comprehensive income statement 2. In one single statement of comprehensive income

Which of the following items may be included in nonoperating income for a company that manufactures televisions?: 1. interest income 2. gain from sale of land 3. selling expenses 4. sales revenue

1. interest income 2. gain from sale of land

The income tax expense or benefit associated with discontinued operations: 1. is included in the computation of net income. 2. is reported separately from the tax computation for continuing operations. 3. is included in the computation of income from continuing operations. 4. is reported with tax from continuing operations.

1. is included in the computation of net income. 2. is reported separately from the tax computation for continuing operations.

Identify which items on an income statement are included in calculating income from continuing operations. (Select all that apply.) 1. loss 2. revenue 3. discontinued operations 4. income tax

1. loss 2. revenue 4. income tax

The accounting treatment required for a material error in financial statements that have already been issued is to 1. restate the financial statements of the previous periods affected. 2. correct the error in the current year and in future years. 3. account for the error prospectively in the financial statements.

1. restate the financial statements of the previous periods affected.

Which of the following items are reported as components of operating income for most manufacturing and merchandising companies?: 1. revenues 2. selling expenses 3. interest expense 4. administrative expenses

1. revenues 2. selling expenses 4. administrative expenses

When a company uses a special charge such as restructuring costs and shows a loss on the income statement, income may be manipulated through: 1. unauthorized income recognition. 2. income statement classification shifting. 3. channel stuffing 4. an illegal act.

2. income statement classification shifting.

Income smoothing describes the concept that: 1. income is averaged over a 10-year moving average. 2. managers manipulate the pattern of income to not vary much between years. 3. income is not reported until approved by the board of directors.

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

The evidence that a financial statement user or analyst might use as evidence to suggest that earnings have been smoothed is: 1. income is averaged with historical numbers. 2. income is deferred until contractual relations are negotiated. 3. earnings may not increase more than 10% without a penalty. 4. earnings have a steady stream over time.

4. earnings have a steady stream over time.