ch04_Selected_EOC_Solutions_K_12e

ch04_Selected_EOC_Solutions_K_12e - CHAPTER 4 Kieso 12e...

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Unformatted text preview: CHAPTER 4 Kieso 12e Edit for Class Site Income Statement and Related Information ASSIGNMENT CLASSIFICATION TABLE (BY TOPIC) Topics Questions Brief Exercises Exercises Problems Concepts for Analysis 1. Income measurement concepts. 1, 2, 3, 4, 5, 6, 7, 8, 9, 10, 18, 28, 31, 32, 33 3, 4, 5, 6, 8 2. Computation of net income from balance sheets and selected accounts. 1 1, 2, 7 3. Single-step income statements; earnings per share. 11, 19, 23, 24 2, 8 3, 4, 6, 7, 10, 15, 16 2, 3, 4, 5 1, 2, 7 4. Multiple-step income statements. 17, 18, 19 3 4, 5, 6, 8 1, 4 5. Extraordinary items; accounting changes; discontinued operations; prior period adjustments; errors. 13, 14, 15, 16, 27, 29 4, 5, 6, 7 5, 7, 9, 10, 12, 13 3, 4, 5, 6, 7 4, 6, 7, 8 6. Retained earnings statement. 30 9, 10 8, 10, 11, 12, 16 1, 2, 4, 5, 6 7. Intraperiod tax allocation. 21, 22, 25, 26, 27 8 8. Comprehensive income. 34 11 14, 15, 16 9 9. Disposal of a component (discon- tinued operations). 29, 35 4-1 ANSWERS TO QUESTIONS KWW 12 e Ch 4 1. The income statement is important because it provides investors and creditors with information that helps them predict the amount, timing, and uncertainty of future cash flows. It helps investors and creditors predict future cash flows in a number of different ways. First, investors and creditors can use the information on the income statement to evaluate the past performance of the enter-prise. Second, the income statement helps users of the financial statements to determine the risk (level of uncertainty) of income—revenues, expenses, gains, and losses —and highlights the relationship among these various components. It should be emphasized that the income statement is used by parties other than investors and creditors. For example, customers can use the income statement to determine a company ’ s ability to provide needed goods or services, unions examine earnings closely as a basis for salary discussions, and the government uses the income statements of companies as a basis for formulating tax and economic policy. 2. Information on past transactions can be used to identify important trends that, if continued, provide information about future performance. If a reasonable correlation exists between past and future performance, predictions about future earnings and cash flows can be made. For example, a loan analyst can develop a prediction of future performance by estimating the rate of growth of past income over the past several periods and project this into the next period. Additional information about current economic and industry factors can be used to adjust the the next period....
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This note was uploaded on 09/25/2008 for the course AC 347 taught by Professor Wu during the Fall '08 term at BU.

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ch04_Selected_EOC_Solutions_K_12e - CHAPTER 4 Kieso 12e...

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