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ACCT 304 Week 8 Final Exam

ACCT 304 Intermediate Accounting I

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1. Income from continuing operations sometimes includes gains from nonoperating activities.
2. Income from continuing operations is an after-tax number consisting of revenues, expenses,
gains, and losses.
3. Income from continuing operations equals net income only in the absence of separately
reported items.
4. Intraperiod tax allocation is the process of associating income tax effects with the income
statement components that create those effects.
5. If the effective tax rate is 40%, a $200,000 before-tax extraordinary gain would increase net
income by $120,000.
6. If General Motors ceased production of the Corvette, it would report any material gains or
losses that would result under discontinued operations.
7. Discontinued operations require reclassification of prior years' income statements but no
change in prior years' net income.
8. Operating income or loss from discontinued operations up to the disposal date is separately
9. The measurement and disposal dates of discontinued operations must fall within the same
fiscal year.
10. If an overall loss from discontinued operations is expected, then the loss is reported in the
year in which the measurement date falls.
11. Estimated gains from discontinued operations can be reported in the measurement year only
to the extent of estimated losses.
12. An item must meet the subjective criteria of being both unusual and infrequent to be reported
as extraordinary.
13. The definition of what constitutes an extraordinary item should be independent of the
operating environment.
14. Material restructuring costs are reported as an element of income from continuing operations.
15. The cumulative effect of a change in accounting principle is the difference between the
ending balance in retained earnings and what the balance would have been had the new method
been applied all year.
16. A change in reporting entity is shown separately on the income statement in the year of the
17. All corporations must disclose EPS.
18. EPS disclosure is required for all items reported net of tax on the income statement.
19. Net income is the starting point in disclosing comprehensive income.
20. Quality of earnings refers to the ability of reported earnings or income to predict future
21. The distinction between operating and nonoperating income relates to:

22. The principal benefit of separately reporting discontinued operations, extraordinary items,
and cumulative effects of changes in accounting principles is to enhance:
23. Interperiod income tax allocation relates primarily to the principle of:
24. An extraordinary event for financial reporting purposes is both:
Unusual and infrequent.
25. The cumulative effect of a change in accounting principle is reported as:
Income from modified operations.
26. The amount reported for the cumulative effect of a change in accounting principle is the netof-tax difference between:
27. The financial statement presentation of the cumulative effect of a change in accounting
principle is most similar to that of reporting:
28. In its Dec. 31, 2000 financial statements, MisterCard estimated that losses on its current
receivables would be $18.2 million. During 2001, MisterCard determined that the losses on the
Dec. 31, 2000 receivables were actually $19.4 million. Ignoring taxes, MisterCard would report,
in its 2001 financial statements, the additional $1.2 million loss on receivables as:
29. Which of the following is not true about EPS?
30. The Gargas Corporation's income statement includes net income, extraordinary items, and
the cumulative effect of a change in accounting principle. Earnings per share information would
be provided for:
31. A reconciliation between net income and comprehensive income would include:
32. Operating cash flows would exclude:
33. The statement of cash flows reports cash flows from the activities of:
34. Cash flows from financing activities include:
35. Changes in accounting estimates are reported:
36. Precepts Inc. incurred a material loss which was not unusual in character, but was clearly an
infrequent occurrence. This loss should be reported as:
37. Sulvane Co. reports income of $300,000 from continuing operations before income taxes and
a before-tax extraordinary loss of $80,000. All income is subject to a 30% tax rate. In the year's
income statement, Sulvane would show the following line-item amounts for income tax expense
and net income:
38. LeFever Construction Co.'s 2000 income from continuing operations before income taxes
was $280,000. LeFever reported a before-tax extraordinary gain of $50,000. All tax items are
subject to a 40% tax rate. In its income statement for 2000, LeFever would show the following
line-item amounts for before-tax net income and income tax expense:
39. Northridge Printers purchased an offset press on January 1, 1997 at a cost of $120,000. The
press had an estimated eight-year life with no residual value Northridge uses straight-line
depreciation. At December 31, 2000, Northridge estimated that the press would have only two
more years of remaining life with no residual value. For 2000, Northridge would report
depreciation expense of:
40. Triptic Travel reported revenue of $300,000 for its year ended December 31, 2000. Accounts
receivable at December 31, 1999 and 2000 were $32,000 and $35,500, respectively. During
2000, accounts totaling $1,500 were deemed to be uncollectible and were written off. Using the
direct method for reporting cash flows from operating activities, Triptic would report cash
collected from customers of:
41. Arrow Printers paid $2,000 interest on short-term notes payable, $10,000 interest on longterm bonds, and $6,000 in dividends on its common stock. Arrow would report cash outflows

from activities, as follows:

42. Parvo Dog Food Co. reported net income of $45,000 for the year ended December 31, 2000.
January 1 balances in accounts receivable and accounts payable were $23,000 and $26,000
respectively. Year-end balances in these accounts were $22,000 and $28,000, respectively.
Assuming that all relevant information has been presented, Parvo's cash flows from operating
activities would be:
43. Anthrax Beef Processors reported net income of $216,000 for its year ended December 31,
2000. Purchases totaled $152,000. Accounts payable balances at the beginning and end of the
year were $36,000 and $33,000, respectively. Beginning and ending inventory balances were
$44,000 and $46,000, respectively. Assuming that all relevant information has been presented,
Anthrax would report operating cash flows of:
44. In Case B, Alpha would report a gain or (loss) from disposal in 2000 of:
45. In Case C, Alpha would report a (loss) from disposal in 2000 of:
46. What would be Misty's net income for the current year?
47. In Case B, Omega would report a gain from disposal in 2000 of:
48. In Case C, Omega would report a gain from disposal in 2000 of:
49. In Case D, Omega would report a gain (loss) from disposal in 2000 of:
50. Rallod would report net cash inflows (outflows) from investing activities in the amount of: