Question 1

The majority of exceptions to the general rule regarding revenue recognition has evolved because new transactions have emerged that do not fit the mold of traditional transactions.

Accepted Answer

A) True 
 B)False

Question 2

Under the current-operating concept, increases in equity from peripheral or incidental transactions (transactions other than sales of products, merchandise, or services)  are referred to as:

Accepted Answer

A)  gains.
B)  revenue.
C)  comprehensive income.
D)  accruals.

Question 3

Which of the following best describes when revenues are generally recognized?

Accepted Answer

A)  At the completion of production
B)  At the point of sale when legal title is transferred
C)  When cash is collected
D)  During production

Question 4

Which of the following is  not‾\underline{not}not​  true regarding SFAS No. 128?

Accepted Answer

A)  Users can now comprehend the effect upon EPS of the full amount of dilution without the presence of the artificial and confusing primary earnings per share calculation.
B)  It brought the US into alignment with virtually all other nations in terms of EPS requirements.
C)  The elimination of primary earnings per share is a case of more information leading to more usefulness.
D)  The FASB and the International Accounting Standards Committee cooperated on the project together.

Question 5

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 6

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

Accepted Answer

A) True 
 B)False

Question 7

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 8

Which of the following is the date that management commits itself to a formal plan to dispose of a business segment?

Accepted Answer

A)  The measurement date
B)  The disposal date
C)  The assessment date
D)  The transfer date

Question 9

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 10

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 11

Describe how the reporting of extraordinary items is a good example of the shift away from finite uniformity to rigid uniformity in accounting standards.

Accepted Answer

The shift in the reporting of extraordin...

Question 12

Although there are exceptions, revenue is generally recognized at the time cash is collected.

Accepted Answer

A) True 
 B)False

Question 13

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 the...

Question 14

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

Accepted Answer

A) True 
 B)False

Question 15

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 16

According to McVay, classification shifting within the income statement is a form of earnings management.

Accepted Answer

A) True 
 B)False

Question 17

The non-operating section of the income statement includes:

Accepted Answer

A)  extraordinary items.
B)  extraordinary items and discontinued operations.
C)  extraordinary items, accounting principle changes, and discontinued operations.
D)  extraordinary items, accounting principle changes, discontinued operations, and prior period adjustments.

Question 18

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

Accepted Answer

Pro forma earnings is a supplementary me...

Question 19

Extraordinary items should be disclosed net of tax.

Accepted Answer

A) True 
 B)False

Question 20

What are the three categories of expenses identified in APB Statement 4, and what is the related hierarchy of expense recognition?

Accepted Answer

APB Opinion No. 4 classifies expenses as...

Exam 12: The Income Statement

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

Although there are exceptions, revenue is generally recognized at the time cash is collected.

Correct Answer
verified

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

Describe how the reporting of extraordinary items is a good example of the shift away from finite uniformity to rigid uniformity in accounting standards.

Correct Answer
verified
The shift in the reporting of extraordin...
View Answer

What are the three categories of expenses identified in APB Statement 4, and what is the related hierarchy of expense recognition?

Correct Answer
verified
APB Opinion No. 4 classifies expenses as...
View Answer

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

Correct Answer
verified

Under the current-operating concept, increases in equity from peripheral or incidental transactions (transactions other than sales of products, merchandise, or services) are referred to as:

Correct Answer
verified

Which of the following is a true statement?

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 non-owner sources.

Correct Answer
verified

Extraordinary items should be disclosed net of tax.

Correct Answer
verified

The non-operating section of the income statement includes:

Correct Answer
verified

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

Correct Answer
verified

According to McVay, classification shifting within the income statement is a form of earnings management.

Correct Answer
verified

The majority of exceptions to the general rule regarding revenue recognition has evolved because new transactions have emerged that do not fit the mold of traditional transactions.

Correct Answer
verified

Which of the following is $\underline{not}$ true regarding SFAS No. 128?

Correct Answer
verified

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

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

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

Correct Answer
verified

Which of the following best describes when revenues are generally recognized?

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

Which of the following is the date that management commits itself to a formal plan to dispose of a business segment?

Correct Answer
verified

Exam 12: The Income Statement

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

Although there are exceptions, revenue is generally recognized at the time cash is collected.

Correct AnswerverifiedShow Answer

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

Describe how the reporting of extraordinary items is a good example of the shift away from finite uniformity to rigid uniformity in accounting standards.

Correct AnswerverifiedThe shift in the reporting of extraordin...View AnswerShow Answer

What are the three categories of expenses identified in APB Statement 4, and what is the related hierarchy of expense recognition?

Correct AnswerverifiedAPB Opinion No. 4 classifies expenses as...View AnswerShow Answer

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

Correct AnswerverifiedShow Answer

Under the current-operating concept, increases in equity from peripheral or incidental transactions (transactions other than sales of products, merchandise, or services) are referred to as:

Correct AnswerverifiedShow Answer

Which of the following is a true statement?

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 non-owner sources.

Correct AnswerverifiedShow Answer

Extraordinary items should be disclosed net of tax.

Correct AnswerverifiedShow Answer

The non-operating section of the income statement includes:

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

According to McVay, classification shifting within the income statement is a form of earnings management.

Correct AnswerverifiedShow Answer

The majority of exceptions to the general rule regarding revenue recognition has evolved because new transactions have emerged that do not fit the mold of traditional transactions.

Correct AnswerverifiedShow Answer

Which of the following is not‾\underline{not}not​ true regarding SFAS No. 128?

Correct AnswerverifiedShow Answer

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

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

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

Correct AnswerverifiedShow Answer

Which of the following best describes when revenues are generally recognized?

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

Which of the following is the date that management commits itself to a formal plan to dispose of a business segment?

Correct AnswerverifiedShow Answer

Correct Answer
verified

Correct Answer
verified

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

Correct Answer
verified
The shift in the reporting of extraordin...
View Answer

Correct Answer
verified
APB Opinion No. 4 classifies expenses as...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
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Correct Answer
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Correct Answer
verified

Correct Answer
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Which of the following is $\underline{not}$ true regarding SFAS No. 128?

Correct Answer
verified

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

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified