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Which of the following statements best defines the transactional approach?


A) The transactional approach is justified by the qualitative characteristic of relevance.
B) The transactional approach is conceptually identical to the capital maintenance concept.
C) Under the transactional approach, assets and liabilities are generally valued at the historical cost.
D) The transactional approach follows the accrual basis of accounting.

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The following information relates to the Pierce Company (in thousands):  Additional investment by Mr. Pierce $5 Sales revenue 150 Net assets, begiming of year 100 Distribution to Mr. Pierce 10 Cost of goods sold 125 Net assets, end of year 180\begin{array}{ll}\text { Additional investment by Mr. Pierce } & \$5 \\\text { Sales revenue } & 150 \\\text { Net assets, begiming of year } & 100 \\\text { Distribution to Mr. Pierce } & 10 \\\text { Cost of goods sold } & 125 \\\text { Net assets, end of year } & 180\end{array} Required: Compute net income, using the financial capital maintenance approach.

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$85 ($180 ...

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Which of the following expenses is an example of expense recognition under the immediate recognition principle?


A) sales commissions
B) depreciation
C) management salaries
D) transportation out

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Which of the following is not required to be disclosed, pursuant to GAAP?


A) Operating income or loss from discontinued component reported on the income statement
B) A description of facts and circumstances leading up to the sale of a discontinued component within the notes of the financial statements
C) All gains or losses from sale of the component reported on the income statement or in the footnotes
D) The book values of major component assets and liabilities reported on the balance sheet or in the footnotes
E) All of these must be disclosed according to GAAP.

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From the following information, compute cost of goods sold.  Purchase returns $200 Inventory, December 311,500 Freight-in 100 Inventory, January 11,800 Purchases 5,000\begin{array}{ll}\text { Purchase returns } & \$ 200 \\\text { Inventory, December } 31 & 1,500 \\\text { Freight-in } & 100 \\\text { Inventory, January } 1 & 1,800 \\\text { Purchases } & 5,000\end{array}


A) $5, 300
B) $5, 200
C) $5, 100
D) $5, 000

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A company is justified in changing from one generally accepted accounting principle to another generally accepted accounting principle only if


A) the change decreases the entity's reported net income
B) the change both improves the financial statement presentation and increases the entity's reported net income
C) the change produces more informative financial statements
D) approval is first obtained from the Financial Accounting Standards Board

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For income reporting purposes, items can appear in any of the following components of the income statement, retained earnings statement, and related schedules and footnotes: For income reporting purposes, items can appear in any of the following components of the income statement, retained earnings statement, and related schedules and footnotes: Several items of accounting information are listed below: Required: By placing the letters (a-f)in the spaces provided above, identify where the information would be most appropriately reported.If the information would not appear in any of the above components, place an (X)in the space. Several items of accounting information are listed below: For income reporting purposes, items can appear in any of the following components of the income statement, retained earnings statement, and related schedules and footnotes: Several items of accounting information are listed below: Required: By placing the letters (a-f)in the spaces provided above, identify where the information would be most appropriately reported.If the information would not appear in any of the above components, place an (X)in the space. Required: By placing the letters (a-f)in the spaces provided above, identify where the information would be most appropriately reported.If the information would not appear in any of the above components, place an (X)in the space.

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How should a material, infrequent event not meeting the criteria for an extraordinary item be disclosed in the income statement?


A) shown as a separate item in income from continuing operations and supplemented by a footnote if deemed appropriate
B) shown in income from continuing operations but not shown as a separate item
C) shown after income from continuing operations but before extraordinary items
D) shown after extraordinary items net of income tax but before net income

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The information content of a statement of retained earnings would be increased if


A) all prior-period adjustments were disallowed by a statement of the Financial Accounting Standards Board
B) the statement were prepared as a supporting schedule that is attached to the bottom of the entity's income statement
C) the entity's income statement were prepared according to the all-inclusive concept
D) the entity's income statement were prepared according to the current-operating-performance concept

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The following information relates to the Zhang Corporation (in thousands):  Sales revenue $90 Net assets, end of year 70 Net income, capital maintenance method 25 Additional investment by stockholders 15Net assets beginining of year 35\begin{array}{llr} \text { Sales revenue } &\$90\\ \text { Net assets, end of year } &70\\ \text { Net income, capital maintenance method } &25\\ \text { Additional investment by stockholders } &15\\ \text {Net assets beginining of year } &35\\\end{array} Required: Compute the amount of dividends paid during the year, using the financial capital maintenance approach.

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$5 ($70 = $35 + $25 ...

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All of the information required in the computation of cost of goods sold is presented below, except for purchases, which must be what amount?  Purchase discounts $200 Inventory, December 311,500 Cost of goods sold 9,500 Purchases ? Inventory, January 1 1,500 Freight-in 500\begin{array}{lc}\text { Purchase discounts } & \$ 200 \\\text { Inventory, December } 31 & 1,500 \\\text { Cost of goods sold } & 9,500 \\\text { Purchases } & ? \\\text { Inventory, January 1 } & 1,500 \\\text { Freight-in } & 500\end{array}


A) $ 9, 800
B) $10, 200
C) $ 8, 700
D) $ 9, 200

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What income measurement approach is identified by the following equation? Net income = Net assets at the end of the year - Net assets at the beginning of the year - Additional investment by owners + Distributions to owners


A) transactional
B) cash flow
C) historical cost
D) capital maintenance

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All of the following are included in the computation of cost of goods sold except


A) freight-out
B) purchase returns and allowances
C) beginning finished goods inventory
D) freight-in

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Below is a list of financial statement components with a corresponding letter code. Below is a list of financial statement components with a corresponding letter code. Required: Indicate where each component would be reported in the financial statements by inserting the corresponding code letters in the space provided. Below is a list of financial statement components with a corresponding letter code. Required: Indicate where each component would be reported in the financial statements by inserting the corresponding code letters in the space provided. Required: Indicate where each component would be reported in the financial statements by inserting the corresponding code letters in the space provided.

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The comparison of the beginning and ending capital (net assets) after adjusting for any additional investments or disinvestment during the period, and indicating the difference to be corporate income, is termed the


A) financial capital maintenance concept
B) physical capital maintenance concept
C) transactional approach
D) asset valuation approach

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Which of the following best describes the characteristics that relate to the income statement?


A) The income statement can alternatively be referred to as a statement of financial position.
B) The income statement is the most important financial statement in the annual report.
C) The income statement serves as a link between the statement of retained earnings and the balance sheet.
D) The income statement summarizes the results of a company's cash operations for the accounting period.

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Which of the following statements concerning the sale of a business component is true?


A) When the sale date for the component is after the current year end, depreciation expense for the component's assets is included in the discontinued operations section of the income statement.
B) The results of discontinued operations should be reported on the income statement after extraordinary items but before cumulative effect of a change in accounting principle.
C) The taxed effect of component-disposition gains or losses need not be disclosed on the face of the income statement.
D) The Financial Accounting Standards Board concluded that component-disposition gains or losses should be classified as extraordinary items.

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The accounting profession has developed three alternatives for matching expenses: association of cause and effect, systematic and rational allocation, and immediate recognition.Discuss the conceptual merits of each alternative and give two examples for each expense matching alternative.

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The association of cause and effect matc...

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Which of the following is a required disclosure in the income statement when reporting the sale of a component of the business?


A) The gain or loss on sale should be reported as an extraordinary item.
B) Results of operations of a discontinued component should be disclosed immediately below extraordinary items.
C) Earnings per share from both income from continuing operations and net income should be disclosed on the face of the income statement.
D) Revenue and expenses applicable to the discontinued operations should be disclosed in the income statement.

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Comprehensive income includes the following changes in equity in a company during a period except


A) transactions with nonowners
B) events relating to nonowner sources
C) circumstances relating to nonowner sources
D) distributions to owners

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Showing 41 - 60 of 104

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