©EMILLECT 2024/2025 ACADEMIC YEAR. ALL RIGHTS RESERVED
FIRST PUBLISH OCTOBER 2024
Financial Accounting and Reporting Exam
1 Study Guide Solutions
Companies report the results of operations of a component of a business that will be disposed of
separately from continuing operations.
-True
-False - ANSWER✔✔True
Revenues and gains increase both net income and owners' equity.
-True
-False - ANSWER✔✔True
Which of the following would represent the least likely use of an income statement prepared for a
business enterprise?
-Use by customers to determine a company's ability to provide needed goods and services.
-Use by labor unions to examine earnings closely as a basis for salary discussions.
-Use by government agencies to formulate tax and economic policy.
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, ©EMILLECT 2024/2025 ACADEMIC YEAR. ALL RIGHTS RESERVED
FIRST PUBLISH OCTOBER 2024
-Use by investors interested in the financial position of the entity - ANSWER✔✔Use by investors
interested in the financial position of the entity
Which of the following is an example of managing earnings down?
-Changing estimated bad debts from 3 percent to 2.5 percent of sales
-Revising the estimated life of equipment from 10 years to 8 years
- Not wring off obsolete inventory
-Reducing research and development expenditures - ANSWER✔✔Revising the estimated life of
equipment from 10 years to 8 years
What might a manger do during the last quarter of a fiscal year if she wanted improve current annual net
income?
- Increase research and development activities
-Relax credit policies for customers
-Delay shipments to customers until after the end of the fiscal year
-Delay purchases from suppliers until after the end of the fiscal year - ANSWER✔✔Relax credit policies
for customers
Which of the following is not generally practiced method of presenting the income statement?
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, ©EMILLECT 2024/2025 ACADEMIC YEAR. ALL RIGHTS RESERVED
FIRST PUBLISH OCTOBER 2024
-Including prior period adjustments in determining net income.
-The single-step income statement
-The consolidated statement of income
-Including gains and losses form discounted operations of a component of a business in determining net
income. - ANSWER✔✔Including prior period adjustments in determining net income
The occurrence which most likely would have no effect on 2020 net income(if all amounts involved are
material) is the
-Sale in 2020 of an office building, acquired in 2001) at its book value
-Collection in 2020 of a receivable form a customer whose account was written in 2016 by a charge to
the allowance account
-Sale in 2020 of fully depreciated equipment for less than its salvage(book) value
-None of the above - ANSWER✔✔Collection in 2020 of a receivable from a customer whose account was
written off in 2016 by a charge to the allowance account
Which of the following is a required disclosure in the income statement when reporting the disposal of a
component of the business.
-The gain or loss on disposal should be reported as a unusual gain or loss
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FIRST PUBLISH OCTOBER 2024
Financial Accounting and Reporting Exam
1 Study Guide Solutions
Companies report the results of operations of a component of a business that will be disposed of
separately from continuing operations.
-True
-False - ANSWER✔✔True
Revenues and gains increase both net income and owners' equity.
-True
-False - ANSWER✔✔True
Which of the following would represent the least likely use of an income statement prepared for a
business enterprise?
-Use by customers to determine a company's ability to provide needed goods and services.
-Use by labor unions to examine earnings closely as a basis for salary discussions.
-Use by government agencies to formulate tax and economic policy.
Page 1/19
, ©EMILLECT 2024/2025 ACADEMIC YEAR. ALL RIGHTS RESERVED
FIRST PUBLISH OCTOBER 2024
-Use by investors interested in the financial position of the entity - ANSWER✔✔Use by investors
interested in the financial position of the entity
Which of the following is an example of managing earnings down?
-Changing estimated bad debts from 3 percent to 2.5 percent of sales
-Revising the estimated life of equipment from 10 years to 8 years
- Not wring off obsolete inventory
-Reducing research and development expenditures - ANSWER✔✔Revising the estimated life of
equipment from 10 years to 8 years
What might a manger do during the last quarter of a fiscal year if she wanted improve current annual net
income?
- Increase research and development activities
-Relax credit policies for customers
-Delay shipments to customers until after the end of the fiscal year
-Delay purchases from suppliers until after the end of the fiscal year - ANSWER✔✔Relax credit policies
for customers
Which of the following is not generally practiced method of presenting the income statement?
Page 2/19
, ©EMILLECT 2024/2025 ACADEMIC YEAR. ALL RIGHTS RESERVED
FIRST PUBLISH OCTOBER 2024
-Including prior period adjustments in determining net income.
-The single-step income statement
-The consolidated statement of income
-Including gains and losses form discounted operations of a component of a business in determining net
income. - ANSWER✔✔Including prior period adjustments in determining net income
The occurrence which most likely would have no effect on 2020 net income(if all amounts involved are
material) is the
-Sale in 2020 of an office building, acquired in 2001) at its book value
-Collection in 2020 of a receivable form a customer whose account was written in 2016 by a charge to
the allowance account
-Sale in 2020 of fully depreciated equipment for less than its salvage(book) value
-None of the above - ANSWER✔✔Collection in 2020 of a receivable from a customer whose account was
written off in 2016 by a charge to the allowance account
Which of the following is a required disclosure in the income statement when reporting the disposal of a
component of the business.
-The gain or loss on disposal should be reported as a unusual gain or loss
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