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Unformatted text preview: E2-36(10-15 min.)1.The name of the statement is antiquated. It should be titled income statement (or statement of earnings, statement of operations, or operating statement).2.The line with the date should not be for an instantof time but for an indicated span of time; a year, a quarter, or a month ending on December 31, 20X3.3.Increases in market values of land and buildings are not usually recognized in historical cost accounting.4.Dividends are not expenses and are not deducted before net profit is computed.5.The appropriate deduction is the cost of goods sold, not the cost of the cars purchased.6.The bottom line should be titled net income or net earnings.7.Although it is not the major point of the problem, the income statement has apparently omitted some expenses; for example, neither rent nor depreciation is shown. As a minimum, one or the other would ordinarily be included.P2-44(10 - 15 min.)1. Criteria i and ii in the footnote relate to the earning of the revenue, and criteria iii and iv relate to its realization. and criteria iii and iv relate to its realization....
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This note was uploaded on 05/24/2008 for the course ACC 203 taught by Professor Choi during the Spring '08 term at NYU.
- Spring '08
- Income Statement