Intermediate Accounting I - Exam 2 Questions and Answers 100% Correct!

Which of the following would be more likely in multiple step income statement: 1. Total Expenses 2. Total Revenues & Gains 3. Operating Income - ANSWER-Operating Income is most likely found in a multiple step income statement Item typically included in the income from continuing operations section of the income statement is: 1. Discontinued operations 2. Restructuring costs 3. Prior period adjustment - ANSWER-Restructuring costs are typically included in income from continuing operations The application of intraperiod income taxes requires that income taxes be apportioned to each of the following items except: 1. Income from continuing operations 2. Operating income 3. Discontinued operations - ANSWER-Operating Income would not be in this list For a manufacturing company, each of the following items would be considered non operating income for income statement purposes except: 1. Income from investments 2. Cost of Goods Sold 3. Interest expense 4. Gain on sale of investments - ANSWER-Cost of Goods Sold would not be considered nonoperating income Earnings per share should be reported for eaxch of the following income statement captions except: 1. Income from continuing operations 2. Discontinued operations 3. Operating income 4. Net income - ANSWER-Operating income is not included in earnings per share Under GAAP, comparative financial statements are: 1. Required for at least the current and the prior year 2. Neither required nor recommended 3. Recommneded for at least the current and the prior year 4. Required for at least the current and the prior 2 years - ANSWER-Recommended for at least the current and the prior year The effect of a material transaction that is infrequent in occurrence but not unusual in nature should be presented separately as a componnent of income from continuing operatinos when the transaction results in a - ANSWER-To be extraordinary it must be both, since this is just one, should be put under income from continuing operations Major distinction between multiple step and single step income statemetn is the separation of: 1. Income tax expense and administrative expenses 2. COGS expense and admn exp. 3. Selling expenses 4. Operating and nonoperating data - ANSWER-Operating and nonoperating data, allows to see gross profit or loss One of the primary benefits of the multiple-step income statement over the single-step income statement ist aht the multiple-step income statement: 1. Recognizes no distinciton among types of costs or expenses 2. Shows gross margin and recognizes different types of costs and expenses 3. Always shows last year's figures in comparison with the current year 4. Discrimination between admin & selling exp. - ANSWER-Shows gross margin and recognizes different types of costs and expenses Which of the following transactions qualifies as a discontinued operation: 1. Planned and approved sale of a segment 2. Phasing out of a production line 3. Changes realted to tech improvements 4. Disposal of part of a line of business - ANSWER-Planned and approved sale of a segment Newt Co. sold a warehouse and used the proceeds to acquire a new warehouse. The excess of the proceeds over the carrying amount of the warehouse sold should be reported as: 1. Extraordinary gain, net of taxes 2. Part of continuing operations 3. Reduction of the ocst of the new warehouse 4. Gain from discontinued operations, net of income taxes - ANSWER-Part of continuing operations