ACCT 2010 Final Exam Review UNT Questions and Correct Answers

The quality of earnings suggests that a. stockholders want the corporation to earn enough income to be able to pay its debts. b. continuing operations and one-time transactions are of equal importance. c. net income is the best measure of the results of operations. d. income from continuing operations is a more relevant predictor of future performance than income from one-time transactions. income from continuing operations is a more relevant predictor of future performance than income from one-time transactions. You are taking a vacation to Italy, and you buy euros for $1.50. On your return, you cash in your unused euros for $1.20. During your vacation, a. the dollar lost value. b. the dollar rose against the euro. c. the euro gained value. d. the euro rose against the dollar the dollar rose against the euro. One way to hedge a foreign-currency transaction loss is to a. pay debts as late as possible. b. collect in your own currency. c. pay in the foreign currency. d. offset foreign-currency inventory and plant assets. collect in your own currency.) Foreign-currency transaction gains and losses are reported on the a. statement of cash flows. b. income statement. c. consolidation work sheet. d. balance sheet. income statement.) Which statement is true? a. Discontinued operations are a separate category on the income statement. b. Prior-period adjustments are part of discontinued operations. c. All prior-period adjustments are combined with continuing operations on the income statement. d. All of the above are true. Discontinued operations are a separate category on the income statement.) Why is it important for companies to report their accounting changes to the public? a. Most accounting changes increase net income, and investors need to know why the increase in net income occurred. b. It is important for the results of operations to be compared between periods. c. Accounting changes affect dividends, and investors want dividends.