ACC 220 Intermediate Accounting I Ch.4A

A discontinued operation is reported when a ____________ of an entity either (a) has been disposed of or (b) is classified as held for sale. (Enter one word per blank)

component

What basis is used for estimated restructuring costs? Multiple choice question. fair value future value net realizable value historical cost

fair value

Non-GAAP earnings are Multiple choice question. historical earnings for the previous 3 years. exclusively used for financial statement analysis. a good performance measure because they are audited. management's estimates and view of earnings.

management's estimates and view of earnings.

______ costs include costs associated with shutdown or relocation of facilities. Multiple choice question. Closing Restructuring Refunding Moving

Restructuring

On May 1, Foxtrot Company agreed to sell the assets of its Footwear Division to Albanese Incorporated for $82 million. The sale was completed on December 31, 2024. The following additional facts pertain to the transaction: The Footwear Division qualifies as a component of the entity according to GAAP regarding discontinued operations. The book value of Footwear's assets totaled $48 million on the date of the sale. Footwear's operating income was a pre-tax loss of $10 million in 2024. Foxtrot's income tax rate is 25%. In the income statement for the year ended December 31, 2024, Foxtrot Company would report income from discontinued operations of: Multiple Choice $26.5 million. $18.0 million. $15.5 million. $24.0 million.

$18.0 million

On October 28, 2024, a company committed to a plan to sell a division that qualified as a component of the entity according to GAAP regarding discontinued operations and was properly classified as held for sale on December 31, 2024, the end of the company's fiscal year. The division's loss from operations for 2024 was $1,910,000. The division's book value and fair value less cost to sell on December 31 were $2,890,000 and $3,550,000, respectively. What before-tax amount(s) should the company report as loss on discontinued operations in its 2024 income statement? Multiple Choice $2,570,000 loss $660,000 gain included in continuing operations and a $1,910,000 loss from discontinued operations No loss would be reported. $1,910,000 loss

$2,570,000 loss

Misty Company reported the following before-tax items during the current year: Sales revenue$ 650Selling and administrative expenses290Restructuring charges20Loss on discontinued operations40 Misty's effective tax rate is 25%. What is Misty's net income for the current year?

$225 $650-$290-$20-$40 = $300 $300x25%=$75 $300-$75=$225

Knowledge Check 01 Alpha Company has sales revenue of $5,000,000, cost of goods sold of $2,000,000, and net income of $750,000. For the last three years, the company has 1,000,000 shares of common stock authorized and 200,000 shares of common stock issued and outstanding. The company does not have any preferred stock. What is basic EPS for Alpha Company?

$3.75 Basic EPS is calculated as net income minus preferred dividends, divided by the weighted-average number of common stock shares outstanding. Net income is $750,000, there are no preferred dividends, and there are 200,000 shares of common stock outstanding throughout the year. EPS = $750,000 ÷ 200,000 shares = $3.75 per share

Merrell Corporation discontinued a component of its business on October 17. For the year, the discontinued component had operating income of $4,000,000. At the time of the sale, the assets of the discontinued component had book values of $10,000,000 and were sold for $12,000,000. Income from operations of the continuing parts of the company were $14,000,000 for the year. Assuming a 40% tax rate, what amount would Merrell report as income from discontinued operations? Multiple Choice $6,000,000 $2,400,000 $3,600,000 $12,000,000

$3600 Operating income from January 1 to October 17$ 4,000,000 Gain on disposal2,000,000 Income from operations of discontinued component6,000,000 Less: Tax effect (40% × $6,000,000)2,400,000 Income from discontinued operations$ 3,600,000

Misty Company reported the following before-tax items during the current year: Sales revenue$1,600 Selling and administrative expenses 860 Restructuring charges 20 Loss on discontinued operations 40 Misty's effective tax rate is 25%.What is Misty's net income for the current year? $580 $540 $500 $510

$540 (1,600-860-20)=720*.75=540

Howard Company's 2024 income from continuing operations before income taxes was $288,000. Howard Company reported before-tax income on discontinued operations of $68,000. All tax items are subject to a 25% tax rate. In its income statement for 2024, Howard Company would show the following line-item amounts for income tax expense and net income: Multiple Choice $220,000 and $271,000 respectively. $356,000 and $305,000 respectively. $72,000 and $267,000 respectively. $267,000 and $72,000 respectively.

$72,000 and $267,000 respectively Income from continuing operations before income taxes $288,000 Income tax expense ($288,000 × 25%) 72,000 Income from continuing operations $216,000 Income on discontinued operations (net of $17,000 tax expense) 51,000 Net income $267,000

Major Company reported 2024 income of $307,000 from continuing operations before income taxes and a before-tax loss on discontinued operations of $67,000. All income is subject to a 25% tax rate. In the income statement for the year ended December 31, 2024, Major Company would show the following line-item amounts for income tax expense and net income: Multiple Choice $76,750 and $180,000 respectively. $60,000 and $230,250 respectively. $76,750 and $240,000 respectively. $60,000 and $374,000 respectively.

$76,750 and $180,000 respectively.

On November 1, 2024, Jamison Incorporated adopted a plan to discontinue its barge division, which qualifies as a separate component of the business according to GAAP regarding discontinued operations. The disposal of the division was expected to be concluded by April 30, 2025. On December 31, 2024, the company's year-end, the following information relative to the discontinued division was accumulated: Operating loss January 1-December 31, 2024$ 78millionEstimated operating losses, January 1 to April 30, 202581millionExcess of fair value, less costs to sell, over book value on December 31, 202413million In its income statement for the year ended December 31, 2024, Jamison would report a before-tax loss on discontinued operations of: Multiple Choice $159 million. $78 million. $146 million. $65 million.

$78 million

Carol Corp. has a component that is a discontinued operation. The revenues and expenses of the component were $100,000 and $160,000, respectively. The component was sold with a resulting gain of $200,000. The tax rate is 40%. What is the total gain or loss on discontinued operations (net-of-tax effects) that will be reported on the income statement? Multiple choice question. $84,000 gain $120,000 gain $60,000 loss $140,000 gain

$84,000 gain Reason: The loss from operating the component is $100,000 - 160,000 = -$60,000. The loss from operating the discontinued operation is then netted against the gain on sale of the discontinued operations -$60,000 + $200,000 = $140,000. The gain net of tax is $140,000 x (1 - 0.40) = $84,000.

Which of the following statements are correct regarding the two income statement formats? Note: Select all that apply. Check All That Apply - No specific standard dictates the format of the income statement. - Companies usually report income tax expense in a separate line in the income statement regardless of the format used. - The amount of net income reported in a single-step income statement will be different than that reported in a multiple-step income statement. - The multiple-step format provides information that might be useful in analyzing trends.

- No specific standard dictates the format of the income statement. - Companies usually report income tax expense in a separate line in the income statement regardless of the format used. - The multiple-step format provides information that might be useful in analyzing trends.

Select all that apply Which of the following items are included in calculating operating income? (Select all that apply.) Multiple select question. expenses related to primary revenue-generating activities expenses related to peripheral activities revenues related to peripheral activities revenues related to primary revenue-generating activities

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

When a material error is discovered in prior financial statements: Multiple Choice assets and liabilities in the current period are restated to their appropriate levels. prior income effects are adjusted to the current period's beginning balance of retained earnings. All of the other answer choices are correct. prior financial statements are restated to their correct amounts.

All of the other answer choices are correct.

Select all that apply If a component of the business qualifies for discontinued operations treatment, which of the following statements are true? (Select all that apply.) Multiple select question. All related revenues, expenses, gains, and losses must be removed from continuing operations. Revenues and expenses are reported in continuing operations, but gains and losses are reported as discontinued operations. Revenue from the discontinued operations is listed immediately below revenue in the operating section of the income statement. The tax expense effect is removed from continuing operations.

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

Income tax expense is reported in what way on the income statement? Multiple choice question. As a separate line item. As part of general expenses. As part of other expenses.

As a separate line item.

The correction of an error in the financial statement of a prior period should be reported: Multiple Choice In the income statement after income from continuing operations and results of discontinued operations. As an adjustment to the beginning balance of retained earnings in the statement of shareholders' equity. As an adjustment to the beginning balance of common stock in the statement of shareholders' equity. In the income statement as part of operating income.

As an adjustment to the beginning balance of retained earnings in the statement of shareholders' equity.

______ long-lived assets should have their balance reduced if there has been a significant impairment of value. Multiple choice question. Neither tangible nor intangible Only intangible Only tangible Both tangible and intangible

Both tangible and intangible

Knowledge Check 01 Taylor Company purchased a machine and plans to depreciate it over its estimated useful life of 10 years. Over the next four years, the machine was used more extensively than originally estimated, so Taylor revised the useful life estimate to a total of 8 years. This change should be accounted for as a: Multiple Choice Change in accounting principle, with a retrospective approach. Change in accounting estimate, with a retrospective approach. Material accounting error, with an adjustment to retained earnings and disclosure note. Change in accounting estimate, with a prospective approach.

Change in accounting estimate, with a prospective approach.

What represents the costs of providing goods and services to customers? Multiple choice question. Revenues Expenses Losses Gains

Expenses

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

False

Expenses reported on an income statement can be classified by nature or by function under these accounting standards. Multiple choice question. U.S. GAAP Both IFRS and U.S. GAAP IFRS

IFRS

Which standards require certain minimum information to be reported on the face of the income statement? Multiple choice question. Both IFRS and U.S. GAAP IFRS U.S. GAAP

IFRS

______ requires certain minimum information be reported on the face of the income statement, while Blank______ does not have minimum requirements. Multiple choice question. US GAAP; IAS IFRS; US GAAP US GAAP; IFRS EITF; AASB

IFRS; US GAAP

To accomplish income smoothing, managers could do which of the following? Multiple Choice In a year net income is particularly high, estimate future bad debts for a higher amount. In a year net income is particularly low, estimate future warranty costs for a higher amount. Report all revenues on a cash basis. Report all expenses on a cash basis.

In a year net income is particularly high, estimate future bad debts for a higher amount.

When are restructuring costs recognized on the income statement? Multiple choice question. In the period the exit or disposal obligation is paid. In the period following the disposal of the assets. In the period the exit or disposal obligation is incurred. In the period included in management's budget.

In the period the exit or disposal obligation is incurred.

Statement of operations and statement of earnings are additional titles for the Multiple choice question. Statement of Cash Flows Statement of Shareholders' Equity Balance Sheet Income Statement

Income Statement

Which of the following profit amounts usually will be listed in both the single-step and multiple-step formats of the income statement? Multiple Choice Gross profit Income before taxes Operating income Net nonoperating income

Income before taxes

Which of the following profit amounts usually will be listed in both the single-step and multiple-step formats of the income statement? Multiple Choice Net nonoperating income Gross profit Income before taxes Operating income

Income before taxes

Which financial statement summarizes the profit-generating activities that occurred during the reporting period? Multiple choice question. Statement of shareholder's equity Income statement Statement of cash flows Balance sheet

Income statement

Carol Corp. has a component that is a discontinued operations. The component suffered a loss of $60,000. The component was sold for a gain of $200,000. The tax rate is 40%. What is the total income tax effect of the discontinued operations? Multiple choice question. Income tax expense of $80,000 Income tax benefit of $80,000 Income tax benefit of $56,000 Income tax expense of $56,000

Income tax expense of $56,000 Reason: ($200,000 - 60,000) x 40%

Select all that apply Which of the following would most likely affect earnings quality? (Select all that apply.) Multiple select question. Losing a major customer. Accelerating revenue recognition. Delaying payment of liabilities.

Losing a major customer. Accelerating revenue recognition.

Which of the following is a decrease in equity due to an incidental transaction? Multiple choice question. Expense Gain Revenue Loss

Loss

Which of the following is likely to be part of temporary earnings? Multiple Choice Interest revenue from a new 10-year note receivable. Loss on the sale of investments. Sales revenue from core product sales. Utilities expense from the factory where goods are produced.

Loss on the sale of investments.

Changes in estimates are accounted for using which approach? Multiple Choice Retrospective Modified prospective Prospective Modified retrospective

Modified retrospective

Management's assessment of permanent earnings are referred to as what? Multiple choice question. Income from continuing operations Net income Perpetual income Non-GAAP earnings

Non-GAAP earnings

Classification shifting by managers has the effects of increasing which level of profitability? Multiple Choice Net income All of the other answer choices are correct. Income before taxes Operating income

Operating income

Classification shifting by managers has the effects of increasing which level of profitability? Multiple Choice Operating income Income before taxes All of the other answer choices are correct. Net income

Operating income

The measure of profit reported on a multiple-step income statement that represents the primary-revenue generating activities of the company is: Multiple Choice Net income. Income before taxes. Gross profit. Operating income.

Operating income

A multiple-step income statement includes which of the following? (Select all that apply.) Multiple select question. Operating income Total expenses Gross profit Income before taxes Total revenues

Operating income Gross profit Income before taxes

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

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

The distinction between operating and nonoperating activities relate to the: Multiple Choice Primary activities of the business. Reliability of the activity measurement. Consistency of the activities. Continuity of the activities.

Primary activities of the business.

Select all that apply If a causal relationship cannot be established between revenues and expenses, which of the following occurs? (Select all that apply.) Multiple select question. Record the expense as incurred. Relate the expense to a particular period. Allocate the expense over several periods. Match the revenue with the expense.

Record the expense as incurred. Relate the expense to a particular period. Allocate the expense over several periods.

Which of the following is most likely to be classified as discontinued operations? Multiple Choice Sale of a group of assets that represents a strategic shift in operations Sale of a small equity method investment in another company Sale of undeveloped land due to lack of customer demand for additional store locations All of the other answers would be classified as discontinued operations.

Sale of a group of assets that represents a strategic shift in operations

The ________-___________ Act established a requirement that a if a company includes non-GAAP earnings in any report filed with the SEC or any public disclosure or press release, it must also provide a reconciliation with earnings determined according to GAAP.

Sarbanes Oxley

The ___________- ______________Act established a requirement that a if a company includes non-GAAP earnings in any report filed with the SEC or any public disclosure or press release, it must also provide a reconciliation with earnings determined according to GAAP.

Sarbanes Oxley

Which of the following most likely would be classified as restructuring costs? Multiple Choice Severance pay for employee layoffs associated with facility closings Acquisition fees associated with the purchase of land and buildings Brokerage fees from the issuance of additional shares of stock Advertising costs to sell a product recently developed by a company

Severance pay for employee layoffs associated with facility closings

Which of the following terms is also used as a heading for an income statement? Multiple choice question. Statement of Operations Statement of Performance Indicators Statement of Cash Flows Statement of Business Activities

Statement of Operations

Crimson Corp. has a component that is a discontinued operation. The component incurred a loss from operations of $40,000. The component was sold with an additional loss of $160,000. The tax rate is 30%. What is the income tax effect for the discontinued operation? Multiple choice question. Tax expense of $12,000 Tax benefit of $48,000 Tax expense of $60,000 Tax benefit of $60,000

Tax benefit of $60,000

Which of the following best describes earnings quality? Multiple Choice The correlation between current year earnings and historical earnings The ability of reported earnings to predict a company's future earnings The effectiveness of management's efforts toward income smoothing The effectiveness of management's efforts in altering assumptions and estimates

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

Which of the following best describes why losing a major customer at the end of the fiscal year can affect earnings quality? Multiple choice question. The company might receive cash collections from that customer in the next fiscal year, even if it does not record new revenues. The current year's revenue number may not be predictive of next year's revenue. The balance of accounts receivable may differ from this year to next year. The company may record fictitious sales from that company in the future.

The current year's revenue number may not be predictive of next year's revenue.

Which of the following best explains why the taxes on discontinued operations are reported separately from taxes on continuing operations? Multiple Choice The taxes on discontinued operations are not expected to recur in future years. Companies are allowed to delay tax payments for discontinued operations for up to five years. The tax rate applied to discontinued operations typically is lower than that applied to continuing operations. The tax rate applied to discontinued operations typically is higher than that applied to continuing operations.

The taxes on discontinued operations are not expected to recur in future years.

Temporary earnings are best characterized as earnings that: Multiple Choice do not conform to Generally Accepted Accounting Principles (GAAP). do not have corresponding cash flows. arise from events that are not likely to recur in the foreseeable future. are from nonoperating activities.

arise from events that are not likely to recur in the foreseeable future.

Which of the following most likely would be classified as restructuring costs? Multiple Choice Advertising costs to sell a product recently developed by a company Acquisition fees associated with the purchase of land and buildings Severance pay for employee layoffs associated with facility closings Brokerage fees from the issuance of additional shares of stock

Which of the following most likely would be classified as restructuring costs? Multiple Choice Advertising costs to sell a product recently developed by a company Acquisition fees associated with the purchase of land and buildings Severance pay for employee layoffs associated with facility closings Brokerage fees from the issuance of additional shares of stock

Select all that apply Which of the following items are reported as components of operating income for most manufacturing and merchandising companies? (Select all that apply.) Multiple select question. administrative expenses selling expenses interest expense revenues

administrative expenses selling expenses revenues

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

continued discontinued

Non-GAAP earnings: Multiple Choice could be considered management's view of permanent earnings. are standardized under generally accepted accounting principles. are useful to compare two different firms' performance. are needed for the correction of errors.

could be considered management's view of permanent earnings.

Select all that apply The primary purpose of the FASB/IASB convergence project on discontinued operations was to (Select all that apply.) Multiple select question. eliminate the category from the income statement develop a common set of disclosures develop a common definition of discontinued operations

develop a common set of disclosures develop a common definition of discontinued operations

As part of convergence efforts, the FASB and IASB have developed a common definition and common set of financial statement ___________ for discontinued operations.

disclosures

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.)

discontinued operations

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

earnings have a steady stream over time.

A gain from discontinued operations will result in an income tax , whereas a loss from discontinued operations will result in an income tax . (Enter one word per blank.)

expense benefit

Multiple Choice Question The income statement is considered most useful for predicting Multiple choice question. future asset base. future borrowing potential. future profitability. future dividends.

future profitability.

Which of the following is an increase in equity from a peripheral or incidental transaction that is included in income from continuing operations? Multiple choice question. loss other comprehensive income revenue gain

gain

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. (Enter one word per blank.)

gain loss

Select all that apply The guidance on discontinued operations defines a discontinued operation as a component that either/or (Select all that apply.) Multiple select question. has been sold is classified as held for sale will likely be sold

has been sold is classified as held for sale

Gains and losses from the sale of investments can affect earnings quality because Multiple choice question. the gains were included in revenues. they are netted against cost of goods sold. they are often recurring. they are often nonrecurring.

hey are often nonrecurring.

Financial statement users typically begin their assessment of permanent earnings with: Multiple Choice net income. income from continuing operations. gross profit. sales revenue.

income from continuing operations.

A company has decided to discontinue a component of its business and sells the component by the end of the year. The amount that the company would report as income from discontinued operations is (ignore tax effects): Multiple Choice only the gain or loss on the disposal of the component's assets. income from operations for the year and only a loss on the disposal of the component's assets. only income from operations for the year. income from operations for the year and either a gain or loss on the disposal of the component's assets.

income from operations for the year and either a gain or loss on the disposal of the component's assets.

The process of associating income tax effects with the income statement components that create those effects is referred to as _______________ tax allocation. (Enter as only one word.)

intraperiod

Select all that apply The income tax expense or benefit associated with discontinued operations (Select all that apply.) Multiple select question. is reported separately from the tax computation for continuing operations. is reported with tax from continuing operations. is included in the computation of income from continuing operations. is included in the computation of net income.

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

Select all that apply The advantages of a multiple-step income statement is (Select all that apply.) Multiple select question. it reports the relationships between various items. it is simpler to prepare than a single-step income statement. it reports expenses by function. it provides more information than a single-step income statement.

it reports the relationships between various items. it reports expenses by function. it provides more information than a single-step income statement.

Popson Incorporated incurred a material loss that was unusual in character. This loss should be reported as a: Multiple Choice discontinued operation. line item within income from continuing operations. line item in the retained earnings statement. line item between income from continuing operations and income from discontinued operations.

line item within income from continuing operations.

Any long-lived asset, whether tangible or intangible, should have its balance reduced if there has been a significant ___________ of value. (Enter only one word.)

loss

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

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

If discontinued operations have a Blank______ effect on the income statement, they must be reported separately. Multiple choice question. positive minimal material negative

material

The type of income statement that reports a series of subtotals such as gross profit, operating income, and income before taxes is a Blank______ income statement. Multiple choice question. multiple-step single-step classified current

multiple-step

An income statement prepared in accordance with IFRS allows expenses to be classified by (Select all that apply.) Multiple select question. nature. size. due date. function.

nature. function.

The principal benefit of separately reporting discontinued operations is to enhance: Multiple Choice comprehensive reporting. predictive ability of future profitability. consistency in reporting. intraperiod continuity.

predictive ability of future profitability.

The principal benefit of separately reporting discontinued operations is to enhance: Multiple Choice predictive ability of future profitability. intraperiod continuity. consistency in reporting. comprehensive reporting.

predictive ability of future profitability.

The initial measurement of restructuring liabilities is at fair value, which often is estimated as the __________ _______________of estimated future cash outflows.

present value

The distinction between operating and nonoperating income relates to: Multiple Choice consistency of income stream. continuity of income. reliability of measurements. primary activities of the reporting entity.

primary activities of the reporting entity.

When a material error is discovered in prior financial statements: Multiple Choice assets and liabilities in the current period are restated to their appropriate levels. prior income effects are adjusted to the current period's beginning balance of retained earnings. prior financial statements are restated to their correct amounts. All of the other answer choices are correct.

prior income effects are adjusted to the current period's beginning balance of retained earnings.

The Sarbanes-Oxley Act requires that if non-GAAP earnings are included in a report or any public disclosure, the company must Multiple choice question. disclose all estimates used in computing non-GAAP earnings. have the non-GAAP earnings audited. provide a signed affidavit verifying the non-GAAP earnings. provide a reconciliation with earnings according to GAAP.

provide a reconciliation with earnings according to GAAP.

Costs that are planned and controlled by management that materially change the scope of the business undertaken or the manner in which the business is conducted are called __________ costs. (Enter only one word.)

restructuring

An inflow of resources resulting from providing goods or services to customers is a(n) Blank______. Multiple choice question. gain expense revenue loss

revenue

The inflow of resources resulting from providing goods or services to customers is referred to as _________. (Enter only one word.)

revenue

Analyzing earnings quality requires an analyst to Multiple choice question. determine whether the auditor was correct in calculating earnings. separate a company's temporary and permanent earnings. combine all earnings for analysis. score a company based on its historical earnings.

separate a company's temporary and permanent earnings.

The two general approaches for preparing an income statement are the _________ step and ___________ step approaches.

single multiple

A company prepares its income statement by listing all sources of revenues and gains at the top, followed by a list of all expenses and losses. Which income statement approach does this describe? Multiple choice question. operating current multiple-step single-step

single-step

The type of income statement that does not classify items as operating and nonoperating is the Blank______ income statement. Multiple choice question. operating noncurrent single-step multiple-step

single-step

The two approaches most commonly used to prepare an income statement are Multiple choice question. single-step and multiple-step operating and nonoperating current and noncurrent direct and indirect

single-step and multiple-step

Nonoperating items that are not expected to continue into the future are considered a Blank______ component of earnings and should be Blank______ when forecasting future performance. Multiple choice question. permanent; included temporary; excluded permanent; excluded temporary; included

temporary; excluded

Earnings quality refers to Multiple choice question. the strength of the regression model used to analyze earnings. the ability of reported earnings to predict future earnings. the earnings score assigned by a financial analyst. the historical earnings of the company.

the ability of reported earnings to predict future earnings.

Net income using the multiple-step income statement presentation is Blank______ net income using the single-step income statement presentation. Multiple choice question. greater than less than the same as

the same as

Income smoothing refers to the ability of management to: Multiple Choice use accruals to reduce the volatility of reported earnings over time. report an earnings amount in each period less than actual earnings. report an earnings amount in each period greater than actual earnings. maintain sales to its current customers for several years.

use accruals to reduce the volatility of reported earnings over time.

If a company pays termination benefits in a restructuring and future service is not required, the restructuring costs should be recognized: Multiple choice question. when the company communicates the arrangement to employees only if it qualifies as a discontinued operation at the end of each year when benefits are paid

when the company communicates the arrangement to employees