Question 1

SFAS No. 130 allows all but which of the following regarding comprehensive income?

Accepted Answer

A)   Reporting comprehensive income in a combined statement of financial performance
B)   Reporting comprehensive income in a separate statement of comprehensive income which would begin with net income
C)   Reporting comprehensive income within a statement of changes in equity
D)   Not reporting comprehensive income

Question 2

Which of the following represents the attribute(s)  that must be measurable before revenue is recognized?

Accepted Answer

A)   Sales price and cash collections
B)   Sales price
C)   Cash collections
D)   Sales price, cash collections, and future costs

Question 3

The main reason underlying SFAS 154 is that it is part of the convergence project with the IASB.

Accepted Answer

A) True 
 B)False

Question 4

The measurement date for determining the value of a stock option is usually the exercise date.

Accepted Answer

A) True 
 B)False

Question 5

Comprehensive income as displayed on the income statement represents:

Accepted Answer

A)   An asset-liability approach.
B)   A revenue-expense approach.
C)   A current operating approach.
D)   None of the above

Question 6

Which of the following is a true statement?

Accepted Answer

A)   When arbitrary allocations are used, income statements have very little information content.
B)   The calculation aspects of most expense measurements are easily resolved under historical cost accounting.
C)   When arbitrary allocations are used, income statements still have information content.
D)   Capital market research has shown that the usefulness of accounting numbers is best resolved using the deductive logic of the allocation problem.

Question 7

If a loss is expected on subsequent disposal of a business segment, the estimated loss is recognized in the financial statements as of the measurement date.

Accepted Answer

A) True 
 B)False

Question 8

Which of the following is true regarding discontinued operations?

Accepted Answer

A)   If a loss is expected on disposal, the estimated loss is recognized in the financial statements as of the measurement date.
B)   If a loss is expected on disposal, the estimated loss is recognized in the financial statements as of the disposal date.
C)   If a loss is expected on disposal, recognition is deferred until realization.
D)   If a gain is expected on disposal, the estimated gain is recognized in the financial statements as of the measurement date.

Question 9

Predicting changes in future economic conditions should be a major consideration in the recognition of future events.

Accepted Answer

A) True 
 B)False

Question 10

Comprehensive income is the change in equity of an entity during a period of transactions and other events and circumstances, from owner and nonowner sources.

Accepted Answer

A) True 
 B)False

Question 11

What is the pro forma earnings approach, and what problem does it present. Also, explain how pro forma earnings differs form the G4+1 income statement proposal.

Accepted Answer

Pro forma earnings is a supplementary me...

Question 12

As a result of APB Opinion No. 30, extraordinary items other than gains and losses from early extinguishment of debt, have practically disappeared.

Accepted Answer

A) True 
 B)False

Question 13

The major expense-recognition problem concerns those costs that are clearly not expired in the period incurred but are clearly not associated with the revenues of a particular period.

Accepted Answer

A) True 
 B)False

Question 14

Which of the following is an argument supporting the "current operating" income recognition school of thought?

Accepted Answer

A)   Most financial statement users look only to bottom-line net income to assess current performance and to make predictions regarding subsequent years' performance.
B)   Under this approach, management makes the decision on whether or not an item is extraordinary and therefore excluded from the income statement.
C)   The summation of all income displayed on the income statement for a period of years should reflect the reporting entity's net income for that period.
D)   Proper classification within the income statement allows both normal recurring items and unusual, infrequently occurring items to be displayed separately within the same statement.

Question 15

Which of the following methods of reporting comprehensive income is preferred by the FASB?

Accepted Answer

A)   Reporting comprehensive income in a combined statement of financial performance
B)   Reporting comprehensive income in a separate statement of comprehensive income which would begin with net income
C)   Reporting comprehensive income within a statement of changes in equity
D)   Not reporting comprehensive income

Question 16

Which of the following statements applies to the two-event view of past event recognition?

Accepted Answer

A)   It would recognize a transaction as occurring when an offer of early retirement is made to employees.
B)   It would be more reliant upon probabilistic estimates than the one-event view.
C)   It is faster than the one-event view.
D)   It is consistent with the asset and liability views of SFAC No. 6.

Question 17

Predicting future legal changes that have not yet been enacted should be a major consideration in the recognition of future events.

Accepted Answer

A) True 
 B)False

Question 18

Backdating stock options appears to be an illegal conversion of assets belonging to shareholders to members of management.

Accepted Answer

A) True 
 B)False

Question 19

The current operating approach has led to the concept of comprehensive income.

Accepted Answer

A) True 
 B)False

Question 20

Respond to the following:
a.
When is revenue generally recognized, and what are three other alternative points in time for recognizing revenue?
b.
When is each alternative revenue recognition method appropriate and why have these methods evolved?
c.
What is the primary criterion for revenue recognition applied in practice, and what attributes must be measurable before revenue is recognized.

Accepted Answer

a.
Revenues should be identified with th...

Exam 12: The Income Statement

Which of the following is an argument supporting the "current operating" income recognition school of thought?

Correct Answer
verified

Comprehensive income is the change in equity of an entity during a period of transactions and other events and circumstances, from owner and nonowner sources.

Correct Answer
verified

The major expense-recognition problem concerns those costs that are clearly not expired in the period incurred but are clearly not associated with the revenues of a particular period.

Correct Answer
verified

As a result of APB Opinion No. 30, extraordinary items other than gains and losses from early extinguishment of debt, have practically disappeared.

Correct Answer
verified

Which of the following is true regarding discontinued operations?

Correct Answer
verified

What is the pro forma earnings approach, and what problem does it present. Also, explain how pro forma earnings differs form the G4+1 income statement proposal.

Correct Answer
verified
Pro forma earnings is a supplementary me...
View Answer

Which of the following represents the attribute(s) that must be measurable before revenue is recognized?

Correct Answer
verified

The current operating approach has led to the concept of comprehensive income.

Correct Answer
verified

Which of the following methods of reporting comprehensive income is preferred by the FASB?

Correct Answer
verified

Correct Answer
verified
a.
Revenues should be identified with th...
View Answer

SFAS No. 130 allows all but which of the following regarding comprehensive income?

Correct Answer
verified

The measurement date for determining the value of a stock option is usually the exercise date.

Correct Answer
verified

Which of the following is a true statement?

Correct Answer
verified

Predicting changes in future economic conditions should be a major consideration in the recognition of future events.

Correct Answer
verified

Which of the following statements applies to the two-event view of past event recognition?

Correct Answer
verified

Predicting future legal changes that have not yet been enacted should be a major consideration in the recognition of future events.

Correct Answer
verified

Comprehensive income as displayed on the income statement represents:

Correct Answer
verified

If a loss is expected on subsequent disposal of a business segment, the estimated loss is recognized in the financial statements as of the measurement date.

Correct Answer
verified

The main reason underlying SFAS 154 is that it is part of the convergence project with the IASB.

Correct Answer
verified

Backdating stock options appears to be an illegal conversion of assets belonging to shareholders to members of management.

Correct Answer
verified

Exam 12: The Income Statement

Which of the following is an argument supporting the "current operating" income recognition school of thought?

Correct AnswerverifiedShow Answer

Comprehensive income is the change in equity of an entity during a period of transactions and other events and circumstances, from owner and nonowner sources.

Correct AnswerverifiedShow Answer

The major expense-recognition problem concerns those costs that are clearly not expired in the period incurred but are clearly not associated with the revenues of a particular period.

Correct AnswerverifiedShow Answer

As a result of APB Opinion No. 30, extraordinary items other than gains and losses from early extinguishment of debt, have practically disappeared.

Correct AnswerverifiedShow Answer

Which of the following is true regarding discontinued operations?

Correct AnswerverifiedShow Answer

What is the pro forma earnings approach, and what problem does it present. Also, explain how pro forma earnings differs form the G4+1 income statement proposal.

Correct AnswerverifiedPro forma earnings is a supplementary me...View AnswerShow Answer

Which of the following represents the attribute(s) that must be measurable before revenue is recognized?

Correct AnswerverifiedShow Answer

The current operating approach has led to the concept of comprehensive income.

Correct AnswerverifiedShow Answer

Which of the following methods of reporting comprehensive income is preferred by the FASB?

Correct AnswerverifiedShow Answer

Correct Answerverifieda.Revenues should be identified with th...View AnswerShow Answer

SFAS No. 130 allows all but which of the following regarding comprehensive income?

Correct AnswerverifiedShow Answer

The measurement date for determining the value of a stock option is usually the exercise date.

Correct AnswerverifiedShow Answer

Which of the following is a true statement?

Correct AnswerverifiedShow Answer

Predicting changes in future economic conditions should be a major consideration in the recognition of future events.

Correct AnswerverifiedShow Answer

Which of the following statements applies to the two-event view of past event recognition?

Correct AnswerverifiedShow Answer

Predicting future legal changes that have not yet been enacted should be a major consideration in the recognition of future events.

Correct AnswerverifiedShow Answer

Comprehensive income as displayed on the income statement represents:

Correct AnswerverifiedShow Answer

If a loss is expected on subsequent disposal of a business segment, the estimated loss is recognized in the financial statements as of the measurement date.

Correct AnswerverifiedShow Answer

The main reason underlying SFAS 154 is that it is part of the convergence project with the IASB.

Correct AnswerverifiedShow Answer

Backdating stock options appears to be an illegal conversion of assets belonging to shareholders to members of management.

Correct AnswerverifiedShow Answer

Correct Answer
verified

Correct Answer
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Correct Answer
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Correct Answer
verified

Correct Answer
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Correct Answer
verified
Pro forma earnings is a supplementary me...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
a.
Revenues should be identified with th...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
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Correct Answer
verified

Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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