Intermeidate Accounting

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CHAPTER 4

INCOME STATEMENT AND RELATED INFORMATION

IFRS questions are available at the end of this chapter.

TRUE-FALSe—Conceptual

AnswerNo.Description

T1.Usefulness of the income statement.
F2.Limitations of the income statement.
F3.Earnings management.
T4.Transaction approach of income measurement.
T5.Single-step income statement.
T6.Revenues and gains.
F7.Multiple-step vs. single-step income statement.
F8.Multiple-step income statement.
T9.Multiple-step vs. single-step income statement.
F10.Current operating performance approach.
T11.Reporting discontinued operations.
F12.Reporting extraordinary items.
F13.Irregular items.
T14.Intraperiod tax allocation.
F15.Reporting earnings per share.
F16.Computation of earnings per share.
T17.Prior period adjustments.
F18.Retained earnings restrictions.
F19.Comprehensive income definition.
T20.Reporting other comprehensive income.

Multiple Choice—Conceptual

AnswerNo.Description

c21.Elements of the income statement.
d22.Usefulness of the income statement.
b23.Limitations of the income statement.
dS24.Use of an income statement.
dS25.Income statement reporting.
c26.Income statement information.
b27.Example of managing earnings down.
c28.Example of managing earnings up.
b29.Improving current net income.
a30.Decreasing current net income.
d31.Single-step income statement advantage.
b32.Single-step income statement.
d33.Methods of preparing income statements.
a34.Income statement presentation.
b35.Event with no income statement effect.
cS36.Net income effect.
Multiple Choice—Conceptual (cont.)

AnswerNo.Description

bP37.Selling expenses.
bP38.Reporting merchandise inventory.
a39.Definition of an extraordinary item.
d40.Classification of an extraordinary item.
d41.Identification of an extraordinary item.
a42.Identification of an extraordinary item.
d43.Identification of an extraordinary item.
a44.Presentation of unusual or infrequent items.
d45.Identification of a change in accounting principle.
d46.Classification of extraordinary items.
c47.EPS disclosures on income statement.
c48.Reporting discontinued operations.
cS49.Reporting unusual or infrequent items.
d50.Intraperiod tax allocation.
d51.Purpose of intraperiod tax allocation.
c52.Intraperiod tax allocation.
d53.Reporting items net of tax.
d54.Reporting items at gross amount.
c55.Earnings per share disclosure.
d56.EPS disclosures on income statement.
d57.EPS disclosures on income statement.
cS58.Earnings per share disclosure.
dP59.Reporting correction of an error.
c60.Retained earnings statement.
d61.Prior period adjustment.
d62.Identification of a prior period adjustment.
b63.Reporting EPS amounts.
c64.Reporting EPS on financial statements.
b65.Comprehensive income inclusion.
a66.Displaying comprehensive income.
d67.Comprehensive income disclosure method.
c 68.Comprehensive income items.
c69.Providing information about components of comprehensive income.

Multiple Choice—Computational

AnswerNo.Description

a70.Calculate total revenues.
c71.Calculate total expenses.
a72.Single-step income statement.
c73.Multiple-step income statement.
c74.Multiple-step income statement.
c75.Calculation of net sales.
a76.Presentation of gain on sale of plant assets.
a77.Extraordinary items.
a78.Extraordinary items.
a79.Calculate income before extraordinary items.
c80.Calculate income before taxes and extraordinary items. Multiple Choice—Computational (cont.)
b81.Calculate extraordinary loss.
a82.Events affecting income from continuing operations.
b83.Calculation of events affecting net income.
c84.Disposal of a major business component.
c85.Tax effect on irregular items....
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