M2 - Income Statement and Balance Sheet

Question 1

A gain that is both unusual & infrequent should be reported as what?

Answer 1

Income from continuing operations

Question 2

In a single step income statement, the total revenues include

Answer 2

all sales of goods, services, and rentals. Purchase discounts are not included in revenue but instead reduce COGS. Recovery of accounts written off does not hit the revenue account.

Question 3

Disclosure is not necessary when

Answer 3

something such as hail damage is a common occurence.

Question 4

Items included in Other Comprehensive Income

Answer 4

Pension Adjustments
Unrealized Gains & Losses
Foreign Currency Items
Effective Potion of Cash Flow Hedges (PUFE)

Question 5

When are income reported in discontinued operations

Answer 5

When there is a disposal of a component of an entity, not a fixed asset because a fixed asset is not considered a component of an entity.

Question 6

Gross Profit

Answer 6

Net sales - COGS

Question 7

The minimum operating cycle for purposes of reporting a “prepaid” CURRENT asset is

Answer 7

One year or 12 months

Question 8

Should interest expense be a general and administrative expense?

Answer 8

No, it is a separate line item on the income statement.

Question 9

The line item displayed before considering income tax effects is:

Answer 9

Income (loss) from operations