Intermediate Accounting
Intermediate Accounting Kieso Weygandt Warfield
Intermediate Accounting Kieso Weygandt Warfield 15th
Intermediate Accounting Kieso Weygandt Warfield 15th Test Bank
Intermediate Accounting Kieso 15th Edition Test Bank
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Intermediate Accounting
Intermediate Accounting Kieso Weygandt Warfield
Intermediate Accounting Kieso Weygandt Warfield 15th
Intermediate Accounting Kieso Weygandt Warfield 15th Test Bank
Intermediate Accounting Kieso 15th Edition Test Bank
CHAPTER 4
INCOME STATEMENT AND RELATED INFORMATION
IFRS questions are available at the end of this chapter.
TRUE-FALSe—Conceptual
Answer No. Description
T 1. Usefulness of the income statement.
F 2. Limitations of the income statement.
F 3. Earnings management.
T 4. Transaction approach of income measurement.
T 5. Single-step income statement.
T 6. Revenues and gains.
T 7. Income from continuing operations.
F 8. Multiple-step income statement.
T 9. Multiple-step vs. single-step income statement.
F 10. Current operating performance approach.
T 11. Reporting discontinued operations.
F 12. Reporting extraordinary items.
F 13. Irregular items.
T 14. Intraperiod tax allocation.
T 15. Reporting earnings per share.
F 16. Computation of earnings per share.
T 17. Prior period adjustments.
T 18. Retained earnings restrictions.
F 19. Comprehensive income definition.
T 20. Reporting other comprehensive income.
Multiple Choice—Conceptual
Answer No. Description
c 21. Elements of the income statement.
d 22. Usefulness of the income statement.
b 23. Limitations of the income statement.
d S24. Use of an income statement.
d S25. Income statement reporting.
b 26. Usefulness of income statement.
b 27. Example of managing earnings down.
c 28. Example of managing earnings up.
b 29. Improving current net income.
a 30. Decreasing current net income.
d 31. Single-step income statement advantage.
b 32. Single-step income statement.
d 33. Methods of preparing income statements.
a 34. Income statement presentation.
b 35. Event with no income statement effect.
c S36. Event with no income statement effect.
Multiple Choice—Conceptual (cont.)
Answer No. Description
b P37. Selling expenses.
b P38. Reporting merchandise inventory.
a 39. Definition of an extraordinary item.
c 40. Accounting for changes in estimates.
d 41. Identification of an extraordinary item.
a 42. Identification of an extraordinary item.
d 43. Identification of an extraordinary item.
a 44. Presentation of unusual or infrequent items.
a 45. Reporting of a change in accounting principle.
d 46. Classification of extraordinary items.
c 47. EPS disclosures on income statement.
c 48. Reporting discontinued operations.
c S49. Reporting unusual or infrequent items.
d 50. Intraperiod tax allocation.
d 51. Purpose of intraperiod tax allocation.
c 52. Intraperiod tax allocation.
d 53. Reporting items net of tax.
d 54. Reporting items at gross amount.
c 55. Earnings per share disclosure.
b 56. EPS and preferred dividends.
d 57. EPS disclosures on income statement.
c S58. Earnings per share disclosure.
d P59. Reporting correction of an error.
c 60. Retained earnings statement.
d 61. Prior period adjustment.
d 62. Identification of a prior period adjustment.
b 63. Reporting EPS amounts.
c 64. Reporting EPS on financial statements.
b 65. Comprehensive income inclusion.
a 66. Displaying comprehensive income.
d 67. Comprehensive income two statement approach.
c 68. Comprehensive income items.
c 69. Statement of stockholders’ equity.
Multiple Choice—Computational
Answer No. Description
a 70. Calculate total revenues.
c 71. Calculate total expenses.
a 72. Single-step income statement.
c 73. Multiple-step income statement.
c 74. Calculate other expenses and losses.
c 75. Calculation of net sales.
a 76. Presentation of gain on sale of plant assets.
a 77. Extraordinary items.
a 78. Extraordinary items.
a 79. Calculate income before extraordinary items.
c 80. Calculate income before taxes and extraordinary items.
Multiple Choice—Computational (cont.)
b 81. Calculate extraordinary loss.
a 82. Events affecting income from continuing operations.
b 83. Calculation of events affecting net income.
c 84. Disposal of a major business component.
c 85. Tax effect on irregular items.
c 86. Tax effect on irregular items.
b 87. Calculate income tax expense.
a 88. Calculate income tax expense.
a 89. Calculate income tax expense.
b 90. Calculate earnings per share.
d 91. Calculate EPS for extraordinary loss.
d 92. Calculate earnings per share.
c 93. Earnings per share.
c 94. Earnings per share.
a 95. Retained earnings statement.
b 96. Retained earnings statement.
c 97. Retained earnings statement.
d 98. Retained earnings statement.
d 99. Calculate balance of retained earnings.
d 100. Calculate other comprehensive income.
a 101. Calculate comprehensive income.
c 102. Calculate ending Accumulated Other Comprehensive Income.
c 103. Calculate ending Retained Earnings balance.
a 104. Calculate total stockholders’ equity.
P Note: these questions also appear in the Problem-Solving Survival Guide.
S Note: these questions also appear in the Study Guide.
Multiple Choice—CPA Adapted
Answer No. Description
d 105. Calculate selling expenses.
a 106. Calculate general and administrative expenses.
a 107. Calculate selling expenses.
a 108. Calculate general and administrative expenses.
d 109. Calculate cost of goods manufactured.
c 110. Calculate income before extraordinary item.
a 111. Determine extraordinary loss.
b 112. Determine infrequent gains not extraordinary.
a 113. Determine infrequent losses not extraordinary.
b 114. Identification of prior period adjustment.
BRIEF Exercises
Item Description
BE4-115 Definitions.
BE4-116 Terminology.
BE4-117 Income statement disclosures.
EXERCISES
E4-118 Calculate net income from change in stockholders’ equity.
E4-119 Calculate net income from change in stockholders’ equity.
E4-120 Income statement classifications.
E4-121 Income statement relationships.
E4-122 Multiple-step income statement.
E4-123 Classification of income and retained earnings statement items.
PROBLEMS
Item Description
P4-124 Multiple-step income statement.
P4-125 Income statement form.
P4-126 Multiple-step income statement.
P4-127 Single-step income statement.
P4-128 Income statement and retained earnings statement.
P4-129 Irregular items and financial statements.
CHAPTER LEARNING OBJECTIVES
- Understand the uses and limitations of an income statement.
- Describe the content and format of the income statement.
- Prepare an income statement.
- Explain how to report various income items.
- Identify where to report earnings per share information.
- Understand the reporting of accounting changes and errors.
- Prepare a retained earnings statement.
- Explain how to report other comprehensive income.
- Compare the accounting procedures for income reporting under GAAP and IFRS.
SUMMARY OF LEARNING OBJECTIVES BY QUESTIONS
Item | Type | Item | Type | Item | Type | Item | Type | Item | Type | Item | Type | Item | Type |
Learning Objective 1 | |||||||||||||
1. | TF | 21. | MC | S24. | MC | 27. | MC | 30. | MC | 117. | BE | ||
2. | TF | 22. | MC | S25. | MC | 28. | MC | 115. | BE | 118. | E-CT | ||
3. | TF | 23. | MC | 26. | MC | 29. | MC | 116. | BE | 119. | E-CT | ||
Learning Objective 2 | |||||||||||||
4. | TF | 32. | MC | ||||||||||
31. | MC | 127. | P | ||||||||||
Learning Objective 3 | |||||||||||||
5. | TF | 31. | MC | P38. | MC | 74. | MC | 107. | MC | 120. | E | 127. | P |
6. | TF | 32. | MC | 70. | MC | 75. | MC | 108. | MC | 121. | E | 128. | P |
7. | TF | 33. | MC | 71. | MC | 76. | MC | 109. | MC | 122. | E | ||
8. | TF | 34. | MC | 72. | MC | 105. | MC | 110. | MC | 124. | P | ||
9. | TF | P37. | MC | 73. | MC | 106. | MC | 111. | MC | 126. | P | ||
Learning Objective 4 | |||||||||||||
7. | TF | S36. | MC | 45. | MC | 53. | MC | 82. | MC | 89. | MC | 123. | E |
10. | TF | 39. | MC | 46. | MC | 54. | MC | 83. | MC | 110. | MC | 124. | P |
11. | TF | 40. | MC | 48. | MC | 77. | MC | 84. | MC | 111. | MC | 125. | P |
12. | TF | 41. | MC | S49. | MC | 78. | MC | 85. | MC | 112. | MC | 126. | P |
13. | TF | 42. | MC | 50. | MC | 79. | MC | 86. | MC | 113. | MC | 128. | P |
14. | TF | 43. | MC | 51. | MC | 80. | MC | 87. | MC | 115. | BE | 129. | P |
35. | MC | 44. | MC | 52. | MC | 81. | MC | 88. | MC | 116. | BE | ||
Learning Objective 5 | |||||||||||||
55. | MC | 63. | MC | 92. | MC | 116. | E | 127. | P | ||||
56. | MC | 64. | MC | 93. | MC | 124. | P | 128. | P | ||||
57. | MC | 90. | MC | 94. | MC | 125. | P | ||||||
58. | MC | 91. | MC | 115. | E | 126. | P | ||||||
Learning Objective 6 | |||||||||||||
15. | TF | 47. | MC | 62. | MC | 116. | BE | 126. | P | 129. | P | ||
16. | TF | P59. | MC | 114. | MC | 123. | E | 127. | P | ||||
17. | TF | 61. | MC | 115. | BE | 124. | P | 128. | P | ||||
Learning Objective 7 | |||||||||||||
18. | TF | 96. | MC | 99. | MC | 128. | P | ||||||
60. | MC | 97. | MC | 116. | BE | ||||||||
95. | MC | 98. | MC | 123. | E | ||||||||
Learning Objective 8 | |||||||||||||
19. | TF | 65. | MC | 67. | MC | 69. | MC | 101. | MC | 103. | MC | 116. | BE |
20. | TF | 66. | MC | 68. | MC | 100. | MC | 102. | MC | 104. | MC | ||
Learning Objective 9 – IFRS Questions | |||||||||||||
1. | TF | 2. | TF | 3. | TF | 4. | TF | 5. | TF | 6. | MC | 7. | MC |
8. | MC | 9. | MC | 10. | MC | 11. | MC | 12. | SA | 13. | SA |
Note: TF = True-False E = Exercise CT= Critical Thinking
MC = Multiple Choice P = Problem BE = Brief Exercise
TRUE-FALSE—Conceptual
- The income statement is useful in assessing the risk or uncertainty of achieving future cash flows.
- A strength of the income statement as compared to the balance sheet is that items which cannot be measured reliably can be reported in the income statement.
- Earnings management generally makes income statement information more useful for predicting future earnings and cash flows.
- The transaction approach of income measurement focuses on the income-related activities that have occurred during the period.
- Companies frequently report income tax expense as the last item before net income on a single-step income statement.
- Revenues and gains increase both net income and owners’ equity.
- The phrase “income from continuing operations” is used only when gains or losses on discontinued operations occur.
- The primary advantage of the multiple-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.
- Gross profit and income from operations are reported on a multiple-step but not on a single-step income statement.
- The accounting profession has adopted a current operating performance approach to income reporting.
- Companies report the results of operations of a component of a business that will be disposed of separately from continuing operations.
- A company should report a restructuring charge as an extraordinary item because these write-offs are not part of a company’s ordinary and typical activities.
- Discontinued operations, extraordinary items, and unusual gains and losses are all reported net of tax in the income statement.
- Intraperiod tax allocation relates the income tax expense of a fiscal period to the specific items that give rise to the amount of the tax provision.
- A company that reports a discontinued operation or an extraordinary item must report per share amounts for these items.
- Dividends declared on common and preferred stock are subtracted from net income in the computation of earnings per share.
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