CA 4-8 | Classification | Rationale | 1. | No disclosure. | Error has “washed out”; that is, subsequent income statement compensated for the error. However, prior year income statements should be restated. | 2. | Extraordinary item section. | Material, unusual in nature, and infrequent in occurrence. | 3. | Depreciation expense in body of income statement, based on new useful life. | Material item, but change in estimated useful life is considered part of normal business activity. |
Words: 765 - Pages: 4
payment less amortization of the discount. | | D. For debt issued at a premium, interest expense reported on the income statement equals cash interest payment less amortization of the premium. | | E. None of the above | Response Feedback: | Rationale: For debt issued at a discount, interest expense reported on the income statement is cash interest paid plus amortization of the discount. | | | | | * Question 2 2 out of 2 points | | | Morse Corp. sells $200,000 of bonds to private
Words: 1169 - Pages: 5
Test 1 Chapters 1-4 Student: ___________________________________________________________________________ 1. A cause-and-effect relationship is implicit in the: A. Realization principle. B. Historical cost principle. C. Matching principle. D. Going concern assumption. 2. Accounting standard setting has been characterized as: A. A political process. B. Using the scientific method. C. Pure deductive reasoning. D. Pure inductive reasoning. 3. The FASB's conceptual framework's qualitative
Words: 1730 - Pages: 7
|16 | | | | 4. |Multiple-step income statements. |17, 18, 19 |3 |4, 5, 6, 8 |1, 4 | | | 5. |Extraordinary items; accounting |13, 14, 15, 16, 27, |4, 5, 6, 7 |5, 7, 9, 10, 12, 13 |3, 4, 5,
Words: 14589 - Pages: 59
ANSWERS TO QUESTIONS 1. The income statement is important because it provides investors and creditors with information that helps them predict the amount, timing, and uncertainty of future cash flows. It helps investors and creditors predict future cash flows in a number of different ways. First, investors and creditors can use the information on the income statement to evaluate the past performance of the enter-prise. Second, the income statement helps users of the financial statements to
Words: 13937 - Pages: 56
1 02 Income Determination 18. Basic earnings per share is computed by dividing net income by the weighted average number of common shares of stock outstanding. 19. The change in equity of an entity during a period from transactions and other events from non-owner sources is known as comprehensive income. 20. The basic accounting equation may be expressed as assets = liabilities – owners’ equity. 21. 22. count. 23. uity. Debit means increase. A contra account is an account that is subtracted from
Words: 3567 - Pages: 15
of 36 days. Eight hypotheses, relating audit delay to company size, industry classification, sign of income, extraordinary item, audit opinion, auditor, year-end and risk are tested in this study. Result from t-test of differences, chi-square test of independent and ordinary leas square regression (OLS) largely support the alternate hypotheses put forward except for extraordinary items and company size. The primary findings are that audit delay is significantly longer for company that (1) non-financial
Words: 5090 - Pages: 21
Chapter 1 Self Test, Question 1 | | | | Correct. | | | The financial statements most frequently provided include all of the following except the: | statement of stockholders' equity. | | balance sheet. | | statement of cash flows. | | statement of retained earnings | Self Test, Question 2 | | | | Correct. | | | An effective process of capital allocation is critical to a healthy economy, which: | promotes productivity. | | encourages
Words: 3972 - Pages: 16
|Multiple Choice Answer Sheet | | | |Name | | |Marks | |Student No. |
Words: 3714 - Pages: 15
|14 |11, 12, 16 | | | |Multiple-step income statements. |3 |5, 6, 7, 8, 9, 10 |1, 4, 6, 8, 15 | | | |Extraordinary items. |5 |6, 8, 9, 10, 13 |1, 3, 5, 6, 8, 11, | | | | | | |13, 15, 16 |
Words: 19406 - Pages: 78
