ACC 220 Chapter 4B SmartBook

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 Operating Financing

Investing

Which of the following are required minimum disclosures in interim financial statements? (Select all that apply.) Sales Net income Total assets Contingencies Shareholders' equity Treasury stock

Sales Net income Contingencies

Compute the asset turnover ratio using the following information: net sales is $100,000 for the year, last year's assets in place were $900,000 and this year's assets in place are $1,100,000. Receivables for both years are $50,000. 20% 11% 9% 10%

10%

How are discontinued operations and unusual items treated in interim financial statements under U.S. GAAP? The amount should be allocated among each quarter of the year in which the discontinued operation or unusual item occurs. The amount should be allocated among all years that will be affected by the discontinued operation or unusual item. The full amount should be separately reported in the period in which the discontinued operation or unusual item occurs.

The full amount should be separately reported in the period in which the discontinued operation or unusual item occurs.

True or false: Net income is a portion of comprehensive income.

True

The statement of cash flows is useful because 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. it is prepared on an accrual basis.

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

Other comprehensive income is reported in the current reporting period on the income statement or as an addition to the income statement, and _________________ other comprehensive income is reported on the balance sheet. (Enter only one word.)

accumulated or accumulative

Cash flows from investing activities include inflows and outflows of cash related to the acquisition and disposition of long-term _________________ used in operations. (Enter only one word.)

assets or asset

Asset turnover ratio is net sales divided by average noncurrent assets. average current assets. average accounts receivable. average total assets.

average total assets.

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

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

The treatment of discontinued operations and unusual items in interim reporting under U.S. GAAP is more consistent with the _____ view. integral part discrete entirety

discrete

Some _________________ recognition is modified in interim reporting to cause interim statements to relate better to annual statements. (Enter only one word.)

expense or cost

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

financing

The classifications on the statement of cash flows are cash flows from (Select all that apply.) financing activities. discontinued activities. operating activities. business activities. investing activities.

financing activities. operating activities. investing activities.

In order to provide more complete information, U.S. GAAP allows that any significant noncash investing and financing activities may be reported (Select all that apply.) in the notes to financial statements. in the statement of owners' equity. in other comprehensive income. on the face of the statement of cash flows.

in the notes to financial statements. on the face of the statement of cash flows.

Financial statements covering periods of less than one year are called_________________ reports. (Enter only one word.)

interim

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 a more accurate prediction of the company's ability to generate future cash flows than income does it provides information about liquidity

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

The statement of cash flows classifies items as recurring and nonrecurring. operating and nonoperating. operating, investing, and financing. current and noncurrent.

operating, investing, and financing.

Significant noncash investing and financing activities are disclosed because they are classified as an extraordinary item. are part of operating activities. occur in the normal course of business. provide more complete information.

provide more complete information.

Accounting changes made in an interim period are reported _________________ . (Enter only one word.)

retrospectively

The financial statement that provides information about cash receipts and cash disbursements for the period is the balance sheet. statement of retained earnings. income statement. statement of cash flows.

statement of cash flows.

Accumulated other comprehensive income represents extraordinary items reported in earnings of the period. the change in retained earnings from net income of the period. the total of other comprehensive income to date. gains and losses reported in net income for the period.

the total of other comprehensive income to date.

When an accounting change occurs during an interim period, the change is applied retrospectively. In subsequent interim periods of the same fiscal year, which of the following are disclosed? (Select all that apply.) Affect on related per share amounts. Affect on total assets and total liabilities. Affect on total revenue. Affect on net income. Affect on income from continuing operations.

Affect on related per share amounts. Affect on net income. Affect on income from continuing operations.

Which of the following are required minimum disclosures in interim financial statements? (Select all that apply.) Treasury stock estimates Significant changes in total assets Changes in accounting principles Significant changes in financial position Shareholders' equity Fair value of financial instruments

Changes in accounting principles Significant changes in financial position Fair value of financial instruments

Computations for EPS for interim reports under U.S. GAAP are based on what? Conditions estimated to exist at the end of the fiscal year. Conditions actually existing during the particular interim period. An average of the preceding four quarters.

Conditions actually existing during the particular interim period.

The earnings per share calculation for interim financial reporting under U.S. GAAP is consistent with which view? Discrete view Entirety view Integral part view

Discrete view

Which type of activities involve cash inflows and outflows from transactions with creditors and owners? Investing Operating Financing

Financing

Inflows and outflows of cash related to the transactions used to determine net operating income are what type of activities? Income Investing Financing Operating

Operating

Which of the following would require modified accounting treatment for interim reporting under U.S. GAAP? (Select all that apply.) Property taxes paid in January for the entire year assessment. A building lease that specifies monthly payment terms. Advertising expenses incurred in the second quarter that will benefit the remainder of the year.

Property taxes paid in January for the entire year assessment. Advertising expenses incurred in the second quarter that will benefit the remainder of the year.

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

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

The operating activities section on the statement of cash flows includes the elements of net income on a(n)_________________ basis rather than a(n)_________________ basis. (Enter one word per blank.)

cash accrual, accrued, or accural

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

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

Interim reports are financial statements covering a period less than one year. greater than one year. equal to one year.

less than one year.

The calculation of _________________ income omits certain gains and losses that are instead included in the broader perspective of other _________________ income. (Enter one word per blank.)

net comprehensive