Financial Statements

Question 1

Transactions not included in net income are

Answer 1

transactions with owners
Error corrections
Items reported initially in other comprehensive income
Transfers to and from appropriated retained earnings, and
Defects on prior periods of accounting changes

Question 2

COGS formula

Answer 2

Beg FG inventory
+purchases or COGM
= Goods available for sale
-ending FG inventory
= COGS

Question 3

COGM formula

Answer 3

Beg WIP
+Sum of periodic manufacturing cost
- ending WIP
= COGM

Or

End FG inventory
+COGS
-Beg FB inventory
= COGM

Question 4

Material items that are unusual in nature, infrequent in occurrence, or both are reported as

Answer 4

A separate component of income from continuing operations.

Question 5

Discontinued operations

Answer 5

Reported separately net of tax in the I/S. This section is presented after the results of continuing operations.

Question 6

If an entity intends to refinance short-term obligations on a long-term basis and demonstrates an ability to consummate the refinancing

Answer 6

The obligation should be excluded from current liabilities and reclassified as no current.

Question 7

The ability to refinance may also be shown by entering into a financing agreeement that meets the following criteria

Answer 7

1. The agreement does not expire within the longer of 1 year or the operating cycle
2. It is noncancelable by the lender
3. No violation of the agreement exists at the balance sheet date
4. The lender is financially capable of honoring the agreement.

Question 8

Statement of Shareholder’s Equity shows a

Answer 8

Reconciliation of the beginning and ending balances in shareholders equity accounts

Question 9

A gain or loss from a transaction that is unusual in nature or infrequent in occurrence should be reported separately as a component of income

Answer 9

Before results of discontinued operations

Question 10

The order of presentation in the income statement is:

Answer 10

1. Income from continuing operations
2. Discontinued operations.

Question 11

Income tax expense or benefit is allocated to

Answer 11

1. Continuing operations
2. Discontinued operations
3. Other Comprehensive income
4. Items debited or credited directly to shareholder’s equity

Question 12

Direct method of preparing a statement of cash flows

Answer 12

If the direct method is used, a reconciliation of net income and net cash flows from operating activities is required to be provided in a seperate schedule.

Question 13

What is the purpose of reporting comprehensive income?

Answer 13

To summarize all changes in equity from nonowner sources

Question 14

What are the components of comprehensive income

Answer 14

Unrealized holding gains and losses on available for sale debt securities

Question 15

Asset Classification
Property, Plant and Equipment