Income State and Statement of Stockholders' Equity Chapter-3
How is Common-Size Income Statement prepared?
Each income statement item is expressed as a percentage of Net Sales
How should companies with more than one revenue source report Revenue and Cost of Goods Sold?
Each revenue line item should be shown separately with a corresponding Cost of Goods Sold line for each revenue source
Which of the items below would be included under "Other Income and Expense?"
Equity Earnings, Gains from Sale of Assets, Interest Income
Which of the following statements are True?
Fixed Cost do not vary proportionately with volume changes but remain the same within a relevant range of activity
Which item is not a special item that must be disclosed separately on the Income Statement?
Foreign currency translation adjustments
Which of the following is an acceptable method to report total Comprehensive Income?
In the Statement of Stockholders' Equity
How does the Equity Method distort earnings?
Income is recognized even though cash may never be received
Which item would not be classified as an Operating Expense?
Interest Expense
Which format of the Income Statement should be used for analysis purposes?
Multiple Steps
How is earnings per Common Share calculated?
Net Profit divided by the average number of Common Stock Shares Outstanding
Which of the following statement is True?
Operating Expenses can be easily analyzed by preparing a Common-Size Income Statement
Which of the following items could be found on a Statement of Shareholder's Equity?
Reason's for retained Retained Earnings Increases or Decreases
Which equations represents an Income Statement?
Revenues-Expenses=Net Income
Selling and Administrative Expenses include which of the following Income Statement items?
Salaries, Rent and Advertising
How are sales reported on the Income Statement?
Sales are shown for three-years Net of Returns and Allowances
How is it possible for a U.S. firm to have increasing earnings but a lower effective tax rate?
Tax rates in foreign countries where the firm operates are lower
Why is it important to assess Operating Profit?
The figure for Operating Profit provides a basis for assessing the success of the firm apart from financing and investing activities and separate from tax considerations
What is Amortization?
The process used to allocate the cost of Capital Leases, Leasehold Improvements and Intangible Assets