ACCT 3001 Chapter 4 Practice
Prior period adjustment
A company is not required to report a per share amount on the face of the income statement for which of the following items? a. Net income b. Prior period adjustment c. Extraordinary item d. Discontinued operations
$500,000. (1,030,000-300,000-170,000-60,000=500,000)
A review of the December 31, 2012, financial statements of Somer Corporation revealed that under the caption "extraordinary losses," Somer reported a total of $1,030,000. Further analysis revealed that the $1,030,000 in losses was comprised of the following items: (1) Somer recorded a loss of $300,000 incurred in the abandonment of equipment formerly used in the business. (2) In an unusual and infrequent occurrence, a loss of $500,000 was sustained as a result of hurricane damage to a warehouse. (3) During 2012, several factories were shut down during a major strike by employees, resulting in a loss of $170,000. (4) Uncollectible accounts receivable of $60,000 were written off as uncollectible. Ignoring income taxes, what amount of loss should Somer report as extraordinary on its 2012 income statement? a. $300,000. b. $500,000. c. $800,000. d. $1,030,000.
$1,780,000. (2,740,000-(1,440,000-480,000)=1,780,000)
An income statement shows "income before income taxes and extraordinary items" in the amount of $2,740,000. The income taxes payable for the year are $1,440,000, including $480,000 that is applicable to an extraordinary gain. Thus, the "income before extraordinary items" is a. $1,780,000. b. $820,000. c. $1,860,000. d. $900,000.
gains from a company selling the only investment it has ever owned.
An item that should be classified as an extraordinary item is a. write-off of goodwill. b. gains from transactions involving foreign currencies. c. losses from moving a plant to another city. d. gains from a company selling the only investment it has ever owned.
($735,000). (1,000,000×70%=700,000+35,000=735,000)
At Ruth Company, events and transactions during 2012 included the following. The tax rate for all items is 30%. (1) Depreciation for 2010 was found to be understated by $60,000. (2) A strike by the employees of a supplier resulted in a loss of $50,000. (3) The inventory at December 31, 2010 was overstated by $80,000. (4) A flood destroyed a building that had a book value of $1,000,000. Floods are very uncommon in that area. The effect of these events and transactions on 2012 net income net of tax would be a. ($35,000). b. ($735,000). c. ($777,000). d. ($833,000).
($35,000). (50,000×30%=15,000; 50,000-15,000)
At Ruth Company, events and transactions during 2012 included the following. The tax rate for all items is 30%. (1) Depreciation for 2010 was found to be understated by $60,000. (2) A strike by the employees of a supplier resulted in a loss of $50,000. (3) The inventory at December 31, 2010 was overstated by $80,000. (4) A flood destroyed a building that had a book value of $1,000,000. Floods are very uncommon in that area. The effect of these events and transactions on 2012 income from continuing operations net of tax would be a. ($35,000). b. ($77,000). c. ($133,000). d. ($833,000).
$6.60. (750,000-90,000/100,000)
Benedict Corporation reports the following information: Net income $750,000 Dividends on common stock 210,000 Dividends on preferred stock 90,000 Weighted average common shares outstanding 100,000 Benedict should report earnings per share of a. $4.50. b. $5.40 c. $6.60. d.$7.50.
Change in principle. (Changing the basis of inventory pricing from FIFO to average cost is an example of a change in principle.)
Changing the basis of inventory pricing from FIFO to average cost is an example of a(n): A. Unusual or infrequent gain or loss. B. Change in principle. C. Change in estimate. D. Discontinued operation
none of these.
Classification as an extraordinary item on the income statement would be appropriate for the a. gain or loss on disposal of a component of the business. b. substantial write-off of obsolete inventories. c. loss from a strike. d. none of these.
net income and discontinued operations. (Earnings per share must be disclosed on the face of the income statement for net income. In addition to net income per share, per share amounts for discontinued operations is shown either on the face of the income statement or in the notes.)
Companies report earnings per share either on the face of the income statement or in the notes for: A. net income and gross margin. B. net income and pretax income. C. net income and discontinued operations. D. discontinued operations and prior period adjustments
investments by owners.
Comprehensive income includes all of the following except a. dividend revenue. b. losses on disposal of assets. c. investments by owners. d. unrealized holding gains.
should be treated as prior period adjustments, similar to changes in accounting principles. (Corrections of errors should be treated as prior period adjustments, similar to changes in accounting principles.)
Corrections of errors: A. should only be reflected in the current year's financial statements if a company presents prior years' financial statement for comparative purposes even if the error effected prior years. B. should be treated as prior period adjustments, similar to changes in accounting principles. C. should only be disclosed in a footnote so readers will be aware of the errors. D. should only be reflected in the current year's balance sheet and never the income statement.
$550,000. (350,000+(50,000×70%)=385,000; 385,000÷70%=550,000)
Dole Company, with an applicable income tax rate of 30%, reported net income of $350,000. Included in income for the period was an extraordinary loss from flood damage of $50,000 before deducting the related tax effect. The company's income before income taxes and extraordinary items was a. $400,000. b. $500,000. c. $550,000. d. $385,000.
Income statement
Earnings per share data are required on the face of which of the following financial statements? a. Statement of retained earnings b. Statement of stockholders' equity c. Income statement d. Balance sheet
income before extraordinary items.
Earnings per share should always be shown separately for a. net income and gross margin. b. net income and pretax income. c. income before extraordinary items. d. extraordinary items and prior period adjustments.
$8,000 (10,000-2,000)
For the year ended December 31, 2012, Transformers Inc. reported the following: Net income $120,000 Preferred dividends declared 20,000 Common dividend declared 4,000 Unrealized holding loss, net of tax 2,000 Retained earnings 160,000 Common stock 80,000 Accumulated Other Comprehensive Income, Beginning Balance 10,000 What would Transformers report as its ending balance of Accumulated Other Comprehensive Income? a. $12,000 b. $10,000 c. $8,000 d. $2,000
$256,000 ($160,000 + $120,000 - $20,000 - $4,000 = $256,000.)
For the year ended December 31, 2012, Transformers Inc. reported the following: Net income $120,000 Preferred dividends declared 20,000 Common dividend declared 4,000 Unrealized holding loss, net of tax 2,000 Retained earnings, beginning balance 160,000 Common stock 80,000 Accumulated Other Comprehensive Income, Beginning Balance 10,000 What would Transformers report as the ending balance of Retained Earnings? a. $278,000 b. $266,000 c. $256,000 d. $254,000
$344,000 (($160,000 + $120,000 - $20,000 - $4,000) + $80,000 + ($10,000 -$2,000) = $344,000.)
For the year ended December 31, 2012, Transformers Inc. reported the following: Net income $120,000 Preferred dividends declared 20,000 Common dividend declared 4,000 Unrealized holding loss, net of tax 2,000 Retained earnings, beginning balance 160,000 Common stock 80,000 Accumulated Other Comprehensive Income, Beginning Balance 10,000 What would Transformers report as total stockholders' equity? a. $344,000 b. $336,000 c. $256,000 d.$240,000
$339,000
Garwood Company has the following items: write-down of inventories, $360,000; loss on disposal of Sports Division, $555,000; and loss due to an expropriation, $339,000. Ignoring income taxes, what total amount should Garwood Company report as extraordinary losses? a. $339,000 b. $555,000. c. $699,000. d. $894,000.
Shown as a separate item in operating revenues or expenses if material and supple-mented by a footnote if deemed appropriate.
How should an unusual event not meeting the criteria for an extraordinary item be disclosed in the financial statements? a. Shown as a separate item in operating revenues or expenses if material and supple-mented by a footnote if deemed appropriate. b. Shown in operating revenues or expenses if material but not shown as a separate item. c. Shown net of income tax after ordinary net earnings but before extraordinary items. d. Shown net of income tax after extraordinary items but before net earnings.
$4.00 (280,000/70,000)
In 2012, Benfer Corporation reported net income of $280,000. It declared and paid common stock dividends of $32,000 and had a weighted average of 70,000 common shares outstanding. Compute the earnings per share to the nearest cent. a. $3.54 b. $2.80 c. $3.60 d. $4.00
$2.25 (600,000-150,000/200,000)
In 2012, Esther Corporation reported net income of $600,000. It declared and paid preferred stock dividends of $150,000 and common stock dividends of $60,000. During 2012, Esther had a weighted average of 200,000 common shares outstanding. Compute Esther's 2012 earnings per share. a. $1.95 b. $2.25 c. $3.00 d. $3.75
$2.50 (1,000,000/400,000)
In 2012, Linz Corporation reported an extraordinary loss of $1,000,000, net of tax. It declared and paid preferred stock dividends of $100,000 and common stock dividends of $300,000. During 2012, Linz had a weighted average of 400,000 common shares outstanding. Compute the effect of the extraordinary loss, net of tax, on earnings per share. a. $1.50 b. $1.75 c. $2.25 d. $2.50
unusual in nature, infrequent, and material in amount. (Extraordinary items are those items which are infrequent in nature and unusual than the normal business transactions and it should be material in amount. Non material should not be classified as extraordinary items.)
In order to be classified as an extraordinary item in the income statement, an event or transaction should be a. unusual in nature, infrequent, and material in amount. b. unusual in nature and infrequent, but it need not be material. c. infrequent and material in amount, but it need not be unusual in nature. d. unusual in nature and material, but it need not be infrequent.
all of these.
Income taxes are allocated to a. extraordinary items. b. discontinued operations. c. prior period adjustments. d. all of these.
all of these.
Information in the income statement helps users to a. evaluate the past performance of the enterprise. b. provide a basis for predicting future performance. c. help assess the risk or uncertainty of achieving future cash flows. d. all of these.
$351,000. (1,500,000-1,050,000-165,000+60,000+6,000=351,000)
Korte Company reported the following information for 2012: Sales revenue $1,500,000 Cost of goods sold 1,050,000 Operating expenses 165,000 Unrealized holding gain on available-for-sale securities 60,000 Cash dividends received on the securities 6,000 For 2012, Korte would report comprehensive income of a. $351,000. b. $345,000. c. $291,000. d. $60,000.
$2,215,000. (2,000,000+215,000)
Leonard Corporation reports the following information: Correction of overstatement of depreciation expense in prior years, net of tax $ 215,000 Dividends declared 160,000 Net income 500,000 Retained earnings, 1/1/12, as reported 2,000,000 Leonard should report retained earnings, 1/1/12, as adjusted at a. $1,785,000. b. $2,000,000. c. $2,215,000. d. $2,555,000.
$2,555,000. (2,000,000+215,000+500,000-160,000)
Leonard Corporation reports the following information: Correction of overstatement of depreciation expense in prior years, net of tax $ 215,000 Dividends declared 160,000 Net income 500,000 Retained earnings, 1/1/12, as reported 2,000,000 Leonard should report retained earnings, 12/31/12, at a. $1,785,000. b. $2,125,000. c. $2,340,000. d. $2,555,000.
only actual amounts are reported in determining net income.
Limitations of the income statement include all of the following except a. items that cannot be measured reliably are not reported. b. only actual amounts are reported in determining net income. c. income measurement involves judgment. d. income numbers are affected by the accounting methods employed.
$120,000.
Madsen Company reported the following information for 2012: Sales revenue $1,530,000 Cost of goods sold 1,050,000 Operating expenses 165,000 Unrealized holding gain on available-for-sale securities 120,000 Cash dividends received on the securities 6,000 For 2012, Madsen would report other comprehensive income of a. $411,000. b. $405,000. c. $126,000. d. $120,000.
$ -0-.
Manning Company has the following items: write-down of inventories, $360,000; loss on disposal of Sports Division, $555,000; and loss due to strike, $339,000. Ignoring income taxes, what total amount should Manning Company report as extraordinary losses? a. $ -0-. b. $555,000. c. $699,000. d. $894,000.
after results from continuing operations. (The effects of discontinued operations are shown net of tax as a separate category in the income statement after continuing operations.)
Material gains or losses resulting from the disposition of a segment of the business should be reported separately as a component of income A. administrative expenses. B. after results from continuing operations. C. selling expenses. D. before results from continuing operations and after cost of goods sold.
$2,355,000. (3,000,000-645,000)
Moorman Corporation reports the following information: Correction of understatement of depreciation expense in prior years, net of tax $ 645,000 Dividends declared 480,000 Net income 1,500,000 Retained earnings, 1/1/12, as reported 3,000,000 Moorman should report retained earnings, 1/1/12, as adjusted at a. $2,355,000. b. $3,000,000. c. $3,645,000. d. $4,665,000.
$3,375,000. (3,000,000-645,000+1,500,000-480,000)
Moorman Corporation reports the following information: Correction of understatement of depreciation expense in prior years, net of tax $ 645,000 Dividends declared 480,000 Net income 1,500,000 Retained earnings, 1/1/12, as reported 3,000,000 Moorman should report retained earnings, 12/31/12, as adjusted at a. $2,355,000. b. $3,375,000. c. $4,020,000. d. $4,665,000.
$3.30. (750,000-90,000/200,000)
Norling Corporation reports the following information: Net income $750,000 Dividends on common stock 210,000 Dividends on preferred stock 90,000 Weighted average common shares outstanding 200,000 Norling should report earnings per share of a. $2.25. b. $2.70 c. $3.30. d. $3.75.
separate column in the statement of changes in stockholders' equity.
The approach most companies use to provide information related to the components of other comprehensive income is a a. second separate income statement. b. combined income statement of comprehensive income. c. separate column in the statement of changes in stockholders' equity. d. footnote disclosure.
modified all-inclusive concept. (The modified all-inclusive concept of income holds that most gains or losses experienced by a concern, whether directly or indirectly related to operations contribute to its long-run profitability and should be included in the computation of net income.)
The concept adopted by the accounting profession that reports most unusual or infrequent gains or losses in the income statement is called: A. phase-out period concept. B. prior period adjustment concept. C. current operating performance concept. D. modified all-inclusive concept.
$1,550,000. (3,400,000-1,600,000-400,000+150,000)
The following information was extracted from the accounts of Essex Corporation at December 31, 2012: CR(DR) Total reported income since incorporation $3,400,000 Total cash dividends paid (1,600,000) Unrealized holding loss (240,000) Total stock dividends distributed (400,000) Prior period adjustment, recorded January 1, 2012 150,000 What should be the balance of retained earnings at December 31, 2012? a. $1,310,000. b. $1,400,000. c. $1,160,000. d. $1,550,000.
Estimate future cash flows
The income statement information would help in which of the following tasks? a. Evaluate the liquidity of a company. b. Evaluate the solvency of a company c. Estimate future cash flows d. Estimate future financial flexibility
net earnings (net income) of a firm for a period of time. (The income statement is defined as the financial statement of a business entity that reveals net earnings for a period of time.)
The income statement reveals a. resources and equities of a firm at a point in time. b. resources and equities of a firm for a period of time. c. net earnings (net income) of a firm at a point in time. d. net earnings (net income) of a firm for a period of time.
revenues, expenses, gains, and losses.
The major elements of the income statement are a. revenue, cost of goods sold, selling expenses, and general expense. b. operating section, nonoperating section, discontinued operations, extraordinary items, and cumulative effect. c. revenues, expenses, gains, and losses. d. all of these.
predicting the amount, timing, and uncertainty of future cash flows. (Investors and creditors are most interested in the ability of the entity to generate cash flows into the future. Accurate predictions of future cash flows help investors assess the economic value of the enterprise and creditors determine the probability of repayment of their claims against the enterprise. The honesty of management or future income from current operations are not items primarily measured by the income statement. Also, financial position is a balance sheet concept.)
The primary reason the income statement is so important to investors and creditors relates to its ability to provide information helpful in A. determining the honesty of those involved in managing the enterprise. B. assessing the financial position of the entity at a point in time. C. predicting the amount, timing, and uncertainty of future cash flows. D. determining the amount of future income the entity may generate from current operations.
Only if floods in the geographical area are unusual in nature and occur infrequently. (For financial reporting purposes extraordinary items are those items which are non-recurring in nature.)
Under which of the following conditions would material flood damage be considered an extraordinary item for financial reporting purposes? a. Only if floods in the geographical area are unusual in nature and occur infrequently. b. Only if the flood damage is material in amount and could have been reduced by prudent management. c. Under any circumstances as an extraordinary item. d. Flood damage should never be classified as an extraordinary item.
a prior period adjustment. (It is an error relating to prior years and hence should be separately disclosed without affecting the figures of the year in which it is discovered.)
Watts Corporation made a very large arithmetical error in the preparation of its year-end financial statements by improper placement of a decimal point in the calculation of depreciation. The error caused the net income to be reported at almost double the proper amount. Correction of the error when discovered in the next year should be treated as a. an increase in depreciation expense for the year in which the error is discovered. b. a component of income for the year in which the error is discovered, but separately listed on the income statement and fully explained in a note to the financial statements. c. an extraordinary item for the year in which the error was made. d. a prior period adjustment.
Delay shipments to customers until after the end of the fiscal year.
What might a manager do during the last quarter of a fiscal year if she wanted to decrease current annual net income? a. Delay shipments to customers until after the end of the fiscal year. b. Relax credit policies for customers. c. Pay suppliers all amounts owed. d. Delay purchases from suppliers until after the end of the fiscal year.
a retrospective adjustment should be made to the financial statements. (When a company changes from one accounting principle to another accounting principle a retrospective adjustment should be made to the financial statements.)
When a company changes from one accounting principle to another accounting principle: A. the company does not have to disclose anything about it. B. the current income statement should include only footnote disclosure so readers will be aware of the change. C. a retrospective adjustment should be made to the financial statements. D. it should always be reflected as a cumulative effect in the current year's financial statements.
an amount after continuing operations and before extraordinary items. (In the income statement, gain or loss from disposal of a discontinued operation is reported after income from continuing operations, but before the extraordinary items.)
When a company discontinues an operation and disposes of the discontinued operation (component), the transaction should be included in the income statement as a gain or loss on disposal reported as a. a prior period adjustment. b. an extraordinary item. c. an amount after continuing operations and before extraordinary items. d. a bulk sale of plant assets included in income from continuing operations.
On the face of the income statement. (to follow generally accepted accounting principle guidelines, that the basic earnings per share should be presented on the face of the income statement.)
Where must earnings per share be disclosed in the financial statements to satisfy generally accepted accounting principles? a. On the face of the statement of retained earnings (or, statement of stockholders' equity.) b. In the footnotes to the financial statements. c. On the face of the income statement. d. Either (a) or (c).
As part of the statement of stockholders' equity
Which disclosure method do most companies use to display the components of other comprehensive income? a. Combined statement of retained earnings b. Second income statement c. Combined statement of comprehensive income d. As part of the statement of stockholders' equity
Sale by a transportation company of its bus operations but not its airline operations. (The only disposal that qualifies as a disposal of a segment is the disposal by the transportation company of its entire bus operations. This company remains in the transportation business, but an entire segment of the business has been terminated. Items (A), (B), and (C) do not involve the elimination of a component of a business.)
Which of the following asset disposals would qualify as a disposal of a segment? A. Phasing out of a product line or class of service. B. Changes occasioned by a technological improvement. C. Sale by an auto parts manufacturer of one of its five parts-manufacturing subsidiaries. D. Sale by a transportation company of its bus operations but not its airline operations.
EPS for income from continuing operations.
Which of the following earnings per share figures must be disclosed on the face of the income statement? a. EPS for income before taxes. b. The effect on EPS from unusual items. c. EPS for gross profit. d. EPS for income from continuing operations.
All of the above. (EPS from both net income and continuing operation must be disclosed on the face of the income statement. If the company report any irregular item must also report earning per share for these item either in the note or staement. EPS = Net Income - Preferred Stock dividends / Weighted average of shares outstanding)
Which of the following earnings per share figures must be disclosed on the face of the income statement? a. EPS on income from continuing operations. b. The effect on EPS from operations of a discontinued division, net of taxes. c. The effect on EPS from an extraordinary item, net of taxes. d. All of the above.
A change from FIFO to LIFO and a change from straight-line to double-declining- balance
Which of the following is a change in accounting principle? a. A change in the estimated service life of machinery b. A change from FIFO to LIFO c. A change from straight-line to double-declining-balance d. A change from FIFO to LIFO and a change from straight-line to double-declining- balance
Earnings per share from both continuing operations and net income should be disclosed on the face of the income statement. (When a component of the business is disposed off it is not a normal business activity and any profit or loss from the disposal component must be shown separately and also the earnings per share from continuing operations and discontinued operations. Net Income should be disclosed.)
Which of the following is a required disclosure in the income statement when reporting the disposal of a component of the business? a. The gain or loss on disposal should be reported as an extraordinary item. b. Results of operations of a discontinued component should be disclosed immediately below extraordinary items. c. Earnings per share from both continuing operations and net income should be disclosed on the face of the income statement. d. The gain or loss on disposal should not be segregated, but should be reported together with the results of continuing operations.
Revising the estimated life of equipment from 10 years to 8 years. (Earnings management means to use the techniques of accounting to produce financial reports which will present the positive reviews of the business of the company and the financial position of the comapnt.)
Which of the following is an example of managing earnings down? a. Changing estimated bad debts from 3 percent to 2.5 percent of sales. b. Revising the estimated life of equipment from 10 years to 8 years. c. Not writing off obsolete inventory. d. Reducing research and development expenditures.
Underestimating warranty claims.
Which of the following is an example of managing earnings up? a. Decreasing estimated salvage value of equipment. b. Writing off obsolete inventory. c. Underestimating warranty claims. d. Accruing a contingent liability for an ongoing lawsuit.
Unrealized gains on available-for-sale securities.
Which of the following is included in comprehensive income? a. Investments by owners. b. Unrealized gains on available-for-sale securities. c. Distributions to owners. d. Changes in accounting principles.
Losses from exchange or translation of foreign currencies. (Gains or losses that are reported on the income statement which are of an unusual nature and infrequent are known as extraordinary items. Losses from exchange or translation of foreign currencies are neither unusual nor infrequent and hence are never classified as an extraordinary item.)
Which of the following is never classified as an extraordinary item? a. Losses from a major casualty. b. Losses from an expropriation of assets. c. Gain on a sale of the only security investment a company has ever owned. d. Losses from exchange or translation of foreign currencies.
Including prior-period adjustments in determining net income. (Prior period adjustments are to be excluded from the determination of income for the current period. Answers (A), (B), and (C) are incorrect because it is generally accepted practice to prepare a consolidated statement of income, multiple-step income statement, and to include gains and losses from discontinued operations of a segment in determining net income.)
Which of the following is not a generally practiced method of presenting the income statement? A. The consolidated statement of income. B. The multiple-step income statement. C. Including gains and losses from discontinued operations of a segment of a business in determining net income. D. Including prior-period adjustments in determining net income.
Combined statement of retained earnings
Which of the following is not an acceptable way of displaying the components of other comprehensive income? a. Combined statement of retained earnings b. Second income statement c. Combined statement of comprehensive income d. As part of the statement of stockholders' equity
Discontinued operations
Which of the following items will not appear in the retained earnings statement? a. Net loss b. Prior period adjustment c. Discontinued operations d. Dividends
Changes in estimates. (Changes in estimates are presented in the income statement only in the account affected. Alternatives (B), (C) and (D) are all items that would be presented in a separate section of the income statement.)
Which of the following items would be presented in the income statement only in the account affected (not in a separate section)? A. Changes in estimates. B. Earnings per share. C. Unusual or infrequent gains or losses. D. Discontinued operations.
Unusual gain
Which of the following items would be reported at its gross amount on the face of the income statement? a. Extraordinary loss b. Prior period adjustment c. Cumulative effect of a change in an accounting principle d. Unusual gain
Discontinued operations (Discontinued operations is a line item in the income statement, that is reported as a separate item in the income statement. It is reported net of taxes and below the tax line, and is not included in income from continuing operations.)
Which of the following items would be reported net of tax on the face of the income statement? a. Prior period adjustment b. Unusual gain c. Cumulative effect of a change in an accounting principle d. Discontinued operations
The sale of a component that is an equity investment that represents 30 percent of a company's total assets. (Unusual and Infrequent Gains and Losses are defined by it being unusual and infrequency of occurrence. Alternatives (A), (C), and (D) clearly meet the criteria for an unusual or infrequent gain or loss. Alternative (B) is a discontinued operation. Refer to Unusual and Infrequent Gains and Losses and Discontinued Operations sections in the textbook.)
Which of the following should not be reported on the income statement as an unusual or infrequent gain or loss? A. The write-off of major assets as a result of new environmental laws prohibiting their use. B. The sale of a component that is an equity investment that represents 30 percent of a company's total assets. C. A large loss as a result of an earthquake. D. Expropriation of assets by a foreign government.
Use by investors interested in the financial position of the entity. (Customers, labor unions, and government agencies may well make use of the income statement for the reasons noted in alternatives A, B, and C respectively. However, the income statement reports results of operations, not financial position. To determine financial position of an entity the investor would have to refer to the information in a balance sheet.)
Which of the following would represent the least likely use of an income statement prepared for a business enterprise? a. Use by customers to determine a company's ability to provide needed goods and services. b. Use by labor unions to examine earnings closely as a basis for salary discussions. c. Use by government agencies to formulate tax and economic policy. d. Use by investors interested in the financial position of the entity.
Gain resulting from the state exercising its right of eminent domain on a piece of land used as a parking lot.
Which of these is generally an example of an extraordinary item? a. Loss incurred because of a strike by employees. b. Write-off of deferred marketing costs believed to have no future benefit. c. Gain resulting from the devaluation of the U.S. dollar. d. Gain resulting from the state exercising its right of eminent domain on a piece of land used as a parking lot.
Material losses resulting from correction of errors related to prior periods.
Which one of the following types of losses is excluded from the determination of net income in income statements? a. Material losses resulting from transactions in the company's investments account. b. Material losses resulting from unusual sales of assets not acquired for resale. c. Material losses resulting from the write-off of intangibles. d. Material losses resulting from correction of errors related to prior periods.
