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Exam 11: The Income Statement, the Statement of Comprehensive Income, and the Statement of Shareholders Equity

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Question 21

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The deprecation method used by a company for income tax purposes will not normally be the same as the method used for financial reporting.

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Question 22

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C-series Corporation's net income for the year ending on December 31, 2013, was $365,000. At the end of 2013, the corporation had outstanding 4,000 shares of $10 nonconvertible preferred shares and 10,000 common shares issued at $20. No shares were issued or retired during 2013. The numerator to be used in the earnings-per-share calculation is:

A) $365,000
B) $350,000
C) $325,000
D) $750,000

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Question 23

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Under IFRS a deferred tax liability is classified as a ________ and income tax payable is classified as a ________ on the balance sheet.

On January 1, 2014, Balises Corporation's Retained Earnings account has a balance of $300,000. During 2014, cash dividends of $20,000 were declared and stock dividends with a market value of $40,000 were declared. Net income for 2014 amounted to $90,000. On June 30, 2014, Balises Corporation issued 5,000 shares of common shares at $10 per share. What is the balance in Retained Earnings appearing on the statement of shareholders' equity on December 31, 2014?

Under IFRS for a given year if income taxes payable is less than income tax expenses, a deferred tax liability is recorded.

A statement of shareholders' equity would not include which type of transaction?

Under IFRS, when income tax payable exceeds income tax expense:

Mechatronic Bogie Ltd., whose income tax rate is 35%, has taxable income of $482,000 and pretax accounting income of $566,000. The entry to record the income tax includes a:

When a company sells a segment of its business, the gain or loss on the disposal of the segment is shown as:

Under IFRS if in one year Zip's income taxes payable exceeds its income tax expense then there is a deferred tax liability.

Corrections to the beginning balance of retained earnings for errors of an earlier period are called:

An unqualified (or clean) opinion issued by an external auditor means:

European Rail Corporation, whose income tax rate is 40%, has taxable income of $815,000 and pretax accounting income of $846,000. Under IFRS the entry to record the income tax includes a:

A company that switches from straight-line amortization to double-declining-balance amortization during an accounting period must report this change on the financial statements as:

Operating income excludes income from discontinued operations.

Given the following information prepare a Statement of Shareholders' Equity for Q8 Inc for 2014.

On January 1, 2013, Assembly System Corporation's Retained Earnings account had a balance of $675,000. During 2013, cash dividends of $25,000 and stock dividends with a market value of $55,000 were declared and distributed. Assembly System Corporation had a net loss of $5,000 in 2013. What is the balance in Retained Earnings that would appear on Assembly System Corporation's statement of shareholders' equity on December 31, 2013?

The dollar amount of a company's net income for each common share outstanding is referred to as:

Net income is considered by many users to be a more reliable indicator of future earnings than earnings from continuing operations.

Mitrac Corporation, whose income tax rate is 35%, has pretax accounting income of $636,000 and taxable income of $748,000. Under IFRS, the entry to record the income tax includes a: