Intermediate Accounting Chapter 4
Kieso Wiley 16th edition Exam
Questions With Solved Solutions
True - CORRECT ANSWER-One of the limitations of the income statement is that items
that cannot be measured reliably are not reported on the income statement.
True - CORRECT ANSWER-The primary advantage of the single-step format lies in the
simplicity of presentation and the absence of any implication that one type of revenue or
expense item has priority over another.
True - CORRECT ANSWER-The multiple-step income statement recognizes a
separation of operating transactions from nonoperating transactions and matches costs
and expenses with related revenues
False - CORRECT ANSWER-From a bank loan officer's point of view, the single-step
income statement is preferable to the multiple-step income statement.
False - CORRECT ANSWER-The advocates of the current operating performance
concept include special gains and losses that are infrequent or unusual in the
calculation of net income.
True - CORRECT ANSWER-A manufacturer of computer hardware who sells a
computer manufacturing facility located in a foreign country that represents 25 percent
of a company's total assets can record the transaction as a disposal of a segment.
False - CORRECT ANSWER-Phasing out of a product line or class of service that
represents 10 percent of a company's total revenue is a disposal of assets that qualifies
as a disposal of a segment of a business.
, False - CORRECT ANSWER-The results of operations of a segment that has been or
will be disposed of need not be separated from the results of continuing operations as
long as the gain or loss from the disposal is shown separately.
False - CORRECT ANSWER-Intraperiod tax allocation causes a reduction in total
income tax expense for the period in which it is used.
True - CORRECT ANSWER-Intraperiod tax allocation helps financial statement users
better understand the impact of taxes on various components.
True - CORRECT ANSWER-A noncontrolling interest is the portion of equity (net
assets) interests is a subsidiary not attributable to the parent company.
True - CORRECT ANSWER-Because of its importance, earnings per share is required
to be disclosed on the face of the income statement.
False - CORRECT ANSWER-The presentation of earnings per share is affected by the
existence of prior period adjustments.
True - CORRECT ANSWER-Adjustments that grow out of the use of estimates in
accounting are not classified as prior period adjustments
False - CORRECT ANSWER-The effect on net income of adopting a new accounting
principle should be disclosed as a separate item following discontinued operations in
the income statement.
True - CORRECT ANSWER-A change in accounting principle is considered appropriate
only when it is demonstrated that the newly adopted principle is preferable to the old
one.
Kieso Wiley 16th edition Exam
Questions With Solved Solutions
True - CORRECT ANSWER-One of the limitations of the income statement is that items
that cannot be measured reliably are not reported on the income statement.
True - CORRECT ANSWER-The primary advantage of the single-step format lies in the
simplicity of presentation and the absence of any implication that one type of revenue or
expense item has priority over another.
True - CORRECT ANSWER-The multiple-step income statement recognizes a
separation of operating transactions from nonoperating transactions and matches costs
and expenses with related revenues
False - CORRECT ANSWER-From a bank loan officer's point of view, the single-step
income statement is preferable to the multiple-step income statement.
False - CORRECT ANSWER-The advocates of the current operating performance
concept include special gains and losses that are infrequent or unusual in the
calculation of net income.
True - CORRECT ANSWER-A manufacturer of computer hardware who sells a
computer manufacturing facility located in a foreign country that represents 25 percent
of a company's total assets can record the transaction as a disposal of a segment.
False - CORRECT ANSWER-Phasing out of a product line or class of service that
represents 10 percent of a company's total revenue is a disposal of assets that qualifies
as a disposal of a segment of a business.
, False - CORRECT ANSWER-The results of operations of a segment that has been or
will be disposed of need not be separated from the results of continuing operations as
long as the gain or loss from the disposal is shown separately.
False - CORRECT ANSWER-Intraperiod tax allocation causes a reduction in total
income tax expense for the period in which it is used.
True - CORRECT ANSWER-Intraperiod tax allocation helps financial statement users
better understand the impact of taxes on various components.
True - CORRECT ANSWER-A noncontrolling interest is the portion of equity (net
assets) interests is a subsidiary not attributable to the parent company.
True - CORRECT ANSWER-Because of its importance, earnings per share is required
to be disclosed on the face of the income statement.
False - CORRECT ANSWER-The presentation of earnings per share is affected by the
existence of prior period adjustments.
True - CORRECT ANSWER-Adjustments that grow out of the use of estimates in
accounting are not classified as prior period adjustments
False - CORRECT ANSWER-The effect on net income of adopting a new accounting
principle should be disclosed as a separate item following discontinued operations in
the income statement.
True - CORRECT ANSWER-A change in accounting principle is considered appropriate
only when it is demonstrated that the newly adopted principle is preferable to the old
one.
