ACCN 3100 Intermediate Accounting Chp 4A Reading

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.)

> Continuing > Discontinuing

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 > Operation

Which of the following terms are used to describe an income statement? (Select all that apply)

> Statement of Operations > Statement of Earnings

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

> administrative expenses > selling expenses > revenues

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 comprehensive income

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

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

> provide information about the investing activities that occurred during the period. > provide information about the financing activities that occurred during the period. > provide information about cash receipts that occurred during the period. > provide information about cash disbursements that occurred during the period.

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

What items must be removed from continuing operations and reported separately for a discontinued operation? (Select all that apply.)

> tax expense > Revenues > gains > expenses

Accumulated other comprehensive income (AOCI) is found on what financial statement?

Balance sheet

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

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

Where on the income statement is income tax expense reported?

In a separate line.

Which financial statement summarizes the profit-generating activities that occurred during the reporting period?

Income statement

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

Statement of Operations

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

True Comprehensive income includes gains and losses that are required to be measured but GAAP does not allow to be reported in the determination of net income.

True or false: The single-step and the multiple-step formats are most commonly used in income statement preparation; however, there are no specific standards on how income from continuing operations must be displayed.

True These 2 methods are most common, but GAAP does not dictate any certain methods.

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

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

The purpose of a statement of cash flows is to provide information about the

cash receipts and cash disbursements during a period.

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

Net income is a part of

comprehensive income

Discontinued operations should be reported on the income statement

net of tax below income from continuing operations.

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

revenue

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

revenue

The two approaches most commonly used to prepare an income statement are

single-step and multiple-step

The purpose of an income statement is to

summarize the profit-generating activities that occurred during a particular reporting period.