The income statement provides investors and creditors information that helps them predict * d. All of these answers are correct. a. the amounts of future cash flows. c. the uncertainty of future cash flows. b. the timing of future cash flows.
1. The income statement provides investors and creditors information that helps them predict *
d. All of these answers are correct.
a. the amounts of future cash flows.
c. the uncertainty of future cash flows.
b. the timing of future cash flows.
2. For Mortenson Company, the following information is available: Cost of goods sold ₤240,000 Sales discounts 8,000 Income tax expense 24,000 Operating expenses 92,000 Sales revenue 400,000. In Mortenson’s income statement, the gross profit is *
b. should be reported at ₤36,000.
a. should not be reported.
c. should be reported at ₤152,000.
d. should be reported at ₤160,000.
3. Which of the following does not appear on a statement of
c.
a. Net loss.
b. Prior period adjustments.
d. Other comprehensive income.
4. Which of the following would appear first in a statement of retained earnings?
b. Prior period adjustment.
d. Share dividends.
c. Cash dividends.
a. Net income.
5. Which of the following items will not appear in the retained earnings statement?
d. Dividends.
c. Discontinued operations.
a. Net loss.
b. Prior period adjustment.
6. The income statement reveals
d. net earnings (net income) of a firm for a period of time.
b. resources and equities of a firm for a period of time.
c. net earnings (net income) of a firm at a point in time.
a. resources and equities of a firm at a point in time.
7. Which of the following equations expresses the definition of “income”?
b. Income = (Revenues + Gains) – (Expenses + Losses)
d. Income = Gains – Losses
a. Income = Revenues – Expenses
c. Income = Revenues + Gains
8.The definition of expenses includes *
b. expenses and losses.
d. expenses, losses and unrealized losses on available-for-sale securities
c. expenses only.
a. losses only.
9. Which of the following is not a selling expense? *
a. Advertising expense.
d. Store supplies consumed.
c. Freight-out.
b. Office salaries expense.
10. In which section of the income statement is interest expense reported? *
b. Income from operations.
d. Non-controlling interest.
a. Gross profit.
c. Income before income taxes.
11. In 2019, Milford Corporation determined that it overstated salaries payable and salaries expense by $20,000 in 2018. In 2019, which of the following accounts will have to be credited to correct this error? *
d. Income Summary
c. Retained Earnings.
a. Salaries and Wages Payable.
b. Salaries and Wages Expense.
12. Comprehensive income includes all of the following, except *
a. revenues and gains.
c. preference share dividends.
b. expenses and losses.
d. unrealized gains and losses on non-trading equity securities
Ortiz Co. had the following account balances: Sales revenue € 180,000 Cost of goods sold 90,000 Salaries and wages expense 15,000 Depreciation expense 30,000 Dividend revenue 6,000 Utilities expense 12,000 Rent revenue 30,000 Interest expense 18,000 Sales returns 16,500 Advertising expense 19,500 What amount would Ortiz report as income from operations in its income statement? *
b. €45,000
a. €73,500
d. €15,000
c. €33,000
14. Limitations of the income statement include all of the following except
c. income measurement involves judgment.
a. items that cannot be measured reliably are not reported.
b. only actual amounts are reported in determining net income.
d. income numbers are affected by the accounting methods employed.
15.Use the following information (in thousands): Sales revenue ¥300,000 Gain on sale of equipment 90,000 Cost of goods sold 164,000 Interest expense 16,000 Selling & administrative expenses 30,000 Income tax rate 30% Determine the amount of income from operations *
c. ¥60,000
d. ¥180,000
b. ¥196,000
a. ¥76,000
16. Use the following information (in thousands) Sales revenue ¥300,000 Gain on sale of equipment 90,000 Cost of goods sold 164,000 Interest expense 16,000 Selling & administrative expenses 30,000 Income tax rate 30% Determine the amount of income taxes. *
b. ¥18,000
c. ¥27,000
d. ¥54,000
Option 5
a. ¥8,000
17. Use the following information (in thousands): Sales revenue ¥300,000 Gain on sale of equipment 90,000 Cost of goods sold 164,000 Interest expense 16,000 Selling & administrative expenses 30,000 Income tax rate 30% Determine the amount of net income
a. ¥126,000
b. ¥21,000
c. ¥42,000
d. ¥63,000
18.Benedict Corporation reports the following information: Net income €500,000 Dividends on ordinary shares 140,000 Dividends on preference shares 60,000 Weighted average ordinary shares outstanding 125,000. Benedict should report earnings per share of *
a. €2.40.
d. €4.00.
c. €3.52.
b. €2.88.
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