Intermediate Accounting Chapter 4 Exam Questions and Answers 100% Pass

Intermediate Accounting Chapter 4 Exam Questions and Answers 100% Pass Misty Company reported the following before-tax items during the current year: Sales-$600, Operating Exp-250, Restructuring charges-20, Extraordinary loss-50.Misty's effective tax rate is 40%. What is misty's income before extraordinary items - Answers ($) x (1 -.4) = $198 Misty Company reported the following before-tax items during the current year: Sales-$600, Operating Exp-250, Restructuring charges-20, Extraordinary loss-50.Misty's effective tax rate is 40%. What is Misty's net income for the current year? - Answers Income before extraordinary item before taxes ($) $330 Income tax expense ($330 x 40%) 132 Income before extraordinary item 198 Extraordinary loss (net of tax benefit, $20) (30 ) Net income $168 The Maytag Corporation's income statement includes income from continuing operations, a loss from discontinued operations, and extraordinary items. Earnings per share information would be provided for: - Answers Income from continuing operations, loss from discontinued operations, extraordinary items, and net income. Change statements include a: - Answers Cash flow statement, income statement, and retained earnings statement The FASB's stated preference for reporting operating cash flows is the: - Answers Direct method. Schneider Inc. had salaries payable of $60,000 and $90,000 at the end of 2012 and 2013, respectively. During 2013, Schneider recorded $620,000 in salaries expense in its income statement. Cash outflows for salaries in 2013 were: - Answers $590,000. Shady Lane's income tax payable account decreased from $14 million to $12 million during 2013. If its income tax expense was $80 million, what was shown as an operating cash flow under the direct method? - Answers A cash outflow of $82 million ($14 million + 80 million - x = $12 million. x = $82 million.) Bird Brain Co. reported net income of $45,000 for the year ended December 31, 2013. January 1 balances in accounts receivable and accounts payable were $23,000 and $26,000 respectively. Year-end balances in these accounts were $22,000 and $28,000, respectively. Assuming that all relevant information has been presented, Bird Brain's cash flows from operating activities would be: - Answers Net income $45,000 Add decrease in A/R 1,000 Add increase in A/P 2,000 Cash flows from operating activities $48,000 Jacobsen Corporation prepares its financial statement applying International Financial Reporting Standards. During its 2013 fiscal year, the company reported before-tax income of $620,000. This amount does not include the following two items, both of which are considered to be material in amount:*Unusual and infrequent gain $200,000 Loss from discontinued operations (300,000)* The company's income tax rate is 40%. In its 2013 income statement, Jacobsen would report income from continuing operations of: - Answers $492,000. Hong Kong Clothiers reported revenue of $5,000,000 for its year ended December 31, 2013. Accounts receivable at December 31, 2012 and 2013, were $320,000 and $355,000, respectively. Using the direct method for reporting cash flows from operating activities, Hong Kong Clothiers would report cash collected from customers of: - Answers Cash collections = $320,000 + 5,000,000 - 355,000 = $4,965,000 Reporting comprehensive income according to International Financial Reporting Standards can be accomplished by each of the following methods except: - Answers In the statement of shareholders' equity. Comprehensive income is the change in equity from: - Answers Nonowner transactions. Reconciliation between net income and comprehensive income would include: - Answers Unrealized losses and unrealized gains on available for sale securities. When a company changes from the straight-line method of deprecation for previously recorded assets to the double-declining balance method, which of the following should be used? - Answers Neither retrospective application or cumulative effects of change in accounting priciple What are the components of income from continuing operations? - Answers Revenues, expenses(including income taxes), gains and losses, excluding those related to discontinued operations and extraordinary items What are revenues? - Answers Inflows of resources resulting from providing goods or services to customers. What are expenses? - Answers Outflows of resources incurred while generating revenue, represent the costs of providing goods and services What are gains? Losses? - Answers Increases or decreases in equity from peripheral or incidental transactions of an entity. What is income tax expense and how is it reported? - Answers Income tax expense is always reported as a separate expense in corporate income statements. The represent a major expense to a corporation. What is operating income - Answers Includes revenues and expenses directly related to the primary revenue-generating activities of the company What is nonoperating income? - Answers Relates to peripheral or incidental activities of the company, so it includes certain gains and losses and revenues and expenses of the company. Income statement that first lists all the revenues and gains incl