Test Bank Chapter 4 Income Statement and Related Information.
CHAPTER 4
INCOME STATEMENT AND RELATED INFORMATION
IFRS questions are available at the end of this chapter.
TRUE-FALSE—Conceptual
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.
F 7. Multiple-step vs. single-step income statement.
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.
F 15. Reporting earnings per share.
F 16. Computation of earnings per share.
T 17. Prior period adjustments.
F 18. Retained earnings restrictions.
F 19. Comprehensive income definition.
T 20. Reporting other comprehensive income.
MULTIPLE CHOICE—Conceptual
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.
c 26. Income statement information.
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. Net income effect.
MULTIPLE CHOICE—Conceptual (cont.)
Description
b P37. Selling expenses.
b P38. Reporting merchandise inventory.
a 39. Definition of an extraordinary item.
d 40. Classification of an extraordinary item.
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.
d 45. Identification 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.
d 56. EPS disclosures on income statement.
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 disclosure method.
c 68. Comprehensive income items.
c 69. Providing information about components of comprehensive income.
MULTIPLE CHOICE—Computational
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. Multiple-step income statement.
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
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.
EXERCISES
Item Description
E4-115 Definitions.
E4-116 Terminology.
E4-117 Income statement disclosures.
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
1. Understand the uses and limitations of an income statement.
2. Prepare a single-step income statement.
3. Prepare a multiple-step income statement.
4. Explain how to report irregular items.
5. Explain intraperiod tax allocation.
6. Identify where to report earnings per share information.
7. Prepare a retained earnings statement.
8. Explain how to report other comprehensive income.
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 4. TF 23. MC 26. MC 29. MC 116. E 119. E
2. TF 21. MC S24. MC 27. MC 30. MC 117. E
3. TF 22. MC S25. MC 28. MC 115. E 118. E
Learning Objective 2
5. TF 31. MC 70. MC 72. MC
6. TF 32. MC 71. MC 127. P
Learning Objective 3
7. TF 34. MC P38. MC 76. MC 108. MC 121. E 126. P
8. TF 35. MC 73. MC 105. MC 109. MC 122. E 128. P
9. TF S36. MC 74. MC 106. MC 110. MC 123. E
33. MC P37. MC 75. MC 107. MC 120. E 124. P
Learning Objective 4
10. TF 41. MC 47. MC 80. MC 110. MC 123. E
11. TF 42. MC 48. MC 81. MC 111. MC 124. P
12. TF 43. MC S49. MC 82. MC 112. MC 125. P
13. TF 44. MC 77. MC 83. MC 113. MC 126. P
39. MC 45. MC 78. MC 84. MC 115. E 127. P
40. MC 46. MC 79. MC 108. MC 116. E 128. P
Learning Objective 5
14. TF 52. MC 85. MC 88. MC 124. P 127. P &n
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