Question 1

Prior-period adjustments are reported on the current year's:

Accepted Answer

A)   income statement.
B)   retained earnings statement.
C)   balance sheet.
D)   footnotes of the financial statements.

Question 2

On August 1, Central Computers, Inc. purchased thirty computer chips, on account, from a company located in Taiwan for 500,000 Taiwan dollars. On that date the Taiwan dollar is worth $0.040. On September 1, when the Taiwan dollar was worth $0.038, payment was made. The journal entry to record the payment on September 1 would include a:

Accepted Answer

A)   debit to Accounts Payable $19,000.
B)   debit to Foreign-Currency Transaction Loss $1,000.
C)   credit to Foreign-Currency Transaction Gain $1,000.
D)   credit to Cash $20,000.

Question 3

The net of foreign-currency transaction gains and losses will appear on the balance sheet.

Accepted Answer

A) True 
 B)False

Question 4

A type of financial statement fraud that is accomplished by shipping more to customers than they ordered, with the expectation that they may return some or all of the items is called:

Accepted Answer

A)   improper shipping recognition.
B)   improper sales recognition.
C)   channel stuffing.
D)   accidental shipping.

Question 5

Items appear on the income statement in which order?

Accepted Answer

A)   Extraordinary items, Discontinued operations, Other revenues and expenses
B)   Discontinued operations, Extraordinary items, Other revenues and expenses
C)   Other revenues and expenses, Discontinued operations, Extraordinary items
D)   Other revenues and expenses, Extraordinary items, Discontinued operations

Question 6

The ratio that uses weighted-average number of shares of common stock outstanding in the denominator is the:

Accepted Answer

A)   earnings per share.
B)   gross profit percentage.
C)   price-earnings ratio.
D)   current ratio.

Question 7

The statement of management's responsibility, issued along with a company's financial statements, indicates all of the following EXCEPT that management:

Accepted Answer

A)   is responsible for establishing and maintaining an adequate system of internal control.
B)   conducted an assessment of internal control over financial reporting based on the framework established by COSO.
C)   states that the internal controls of the company have been audited by the company's outside auditors.
D)   has hired a new CEO in the current year.

Question 8

Which entity requires companies issuing publicly traded stock to have their financial statements audited by an external auditor?

Accepted Answer

A)   Securities and Exchange Commission
B)   Internal Revenue Service
C)   Committee of Sponsoring Organizations
D)   Financial Accounting Standards Board

Question 9

Roughly half of all financial statement frauds over the past two decades have involved:

Accepted Answer

A)   improper expense recognition.
B)   improper revenue recognition.
C)   improper depreciation methods.
D)   bankruptcy.

Question 10

Prior-period adjustments appear on the statement of retained earnings.

Accepted Answer

A) True 
 B)False

Question 11

Prior-period adjustments:

Accepted Answer

A)   only decrease retained earnings.
B)   only increase retained earnings.
C)   can either increase or decrease retained earnings.
D)   do not affect retained earnings.

Question 12

Income tax payable is computed by multiplying income before income taxes per the income statement by the income tax rate.

Accepted Answer

A) True 
 B)False

Question 13

A company is required to report both basic and diluted earnings per share when the:

Accepted Answer

A)   company's capital structure includes convertible preferred stock.
B)   company has extraordinary gains and losses.
C)   company has discontinued operations.
D)   company reports both net income and comprehensive income.

Question 14

An event or transaction should be considered as an extraordinary item if it is unusual in nature and if it occurs infrequently.

Accepted Answer

A) True 
 B)False

Question 15

The discontinued operations section of the income statement refers to the:

Accepted Answer

A)   loss on products that did not sell.
B)   discontinuance of a product line.
C)   disposal of out of date equipment.
D)   disposal of a segment of a business.

Question 16

The characteristic of earnings that makes it most useful for decision making is called:

Accepted Answer

A)   extraordinary item.
B)   earnings quality.
C)   comprehensive income.
D)   clean opinion.

Question 17

On January 1, 2012, Vanderbilt Corporation had 500,000 shares of $1 par value common stock outstanding and 25,000 shares of 5%, $100 par value preferred stock outstanding. There were no stock transactions during the year. Net income for the year was 429,000. Compute the earnings per share (to the third decimal place).

Accepted Answer

EPS = (Net income - preferred ...

Question 18

The paragraph in a typical audit report that describes how the audit was performed is the:

Accepted Answer

A)   first paragraph.
B)   second paragraph.
C)   third paragraph.
D)   fourth paragraph.

Question 19

Financial statement fraud does not include the improper recognition of expenses.

Accepted Answer

A) True 
 B)False

Question 20

Earnings per share shows how much income a company earned for each share of stock.

Accepted Answer

A) True 
 B)False

Exam 11: The Income Statement, the Statement of Comprehensive Income, the Statement of Stockholders Equity

Income tax payable is computed by multiplying income before income taxes per the income statement by the income tax rate.

Correct Answer
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The paragraph in a typical audit report that describes how the audit was performed is the:

Correct Answer
verified

The discontinued operations section of the income statement refers to the:

Correct Answer
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Correct Answer
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Prior-period adjustments:

Correct Answer
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Items appear on the income statement in which order?

Correct Answer
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The ratio that uses weighted-average number of shares of common stock outstanding in the denominator is the:

Correct Answer
verified

Which entity requires companies issuing publicly traded stock to have their financial statements audited by an external auditor?

Correct Answer
verified

Roughly half of all financial statement frauds over the past two decades have involved:

Correct Answer
verified

The statement of management's responsibility, issued along with a company's financial statements, indicates all of the following EXCEPT that management:

Correct Answer
verified

Correct Answer
verified
EPS = (Net income - preferred ...
View Answer

A company is required to report both basic and diluted earnings per share when the:

Correct Answer
verified

Prior-period adjustments appear on the statement of retained earnings.

Correct Answer
verified

Earnings per share shows how much income a company earned for each share of stock.

Correct Answer
verified

A type of financial statement fraud that is accomplished by shipping more to customers than they ordered, with the expectation that they may return some or all of the items is called:

Correct Answer
verified

The characteristic of earnings that makes it most useful for decision making is called:

Correct Answer
verified

An event or transaction should be considered as an extraordinary item if it is unusual in nature and if it occurs infrequently.

Correct Answer
verified

Prior-period adjustments are reported on the current year's:

Correct Answer
verified

Financial statement fraud does not include the improper recognition of expenses.

Correct Answer
verified

The net of foreign-currency transaction gains and losses will appear on the balance sheet.

Correct Answer
verified

Exam 11: The Income Statement, the Statement of Comprehensive Income, the Statement of Stockholders Equity

Income tax payable is computed by multiplying income before income taxes per the income statement by the income tax rate.

Correct AnswerverifiedShow Answer

The paragraph in a typical audit report that describes how the audit was performed is the:

Correct AnswerverifiedShow Answer

The discontinued operations section of the income statement refers to the:

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Prior-period adjustments:

Correct AnswerverifiedShow Answer

Items appear on the income statement in which order?

Correct AnswerverifiedShow Answer

The ratio that uses weighted-average number of shares of common stock outstanding in the denominator is the:

Correct AnswerverifiedShow Answer

Which entity requires companies issuing publicly traded stock to have their financial statements audited by an external auditor?

Correct AnswerverifiedShow Answer

Roughly half of all financial statement frauds over the past two decades have involved:

Correct AnswerverifiedShow Answer

The statement of management's responsibility, issued along with a company's financial statements, indicates all of the following EXCEPT that management:

Correct AnswerverifiedShow Answer

Correct AnswerverifiedEPS = (Net income - preferred ...View AnswerShow Answer

A company is required to report both basic and diluted earnings per share when the:

Correct AnswerverifiedShow Answer

Prior-period adjustments appear on the statement of retained earnings.

Correct AnswerverifiedShow Answer

Earnings per share shows how much income a company earned for each share of stock.

Correct AnswerverifiedShow Answer

A type of financial statement fraud that is accomplished by shipping more to customers than they ordered, with the expectation that they may return some or all of the items is called:

Correct AnswerverifiedShow Answer

The characteristic of earnings that makes it most useful for decision making is called:

Correct AnswerverifiedShow Answer

An event or transaction should be considered as an extraordinary item if it is unusual in nature and if it occurs infrequently.

Correct AnswerverifiedShow Answer

Prior-period adjustments are reported on the current year's:

Correct AnswerverifiedShow Answer

Financial statement fraud does not include the improper recognition of expenses.

Correct AnswerverifiedShow Answer

The net of foreign-currency transaction gains and losses will appear on the balance sheet.

Correct AnswerverifiedShow Answer

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Correct Answer
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Correct Answer
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EPS = (Net income - preferred ...
View Answer

Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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