Chap004 - Chapter 04 - The Income Statement and Statement...

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Unformatted text preview: Chapter 04 - The Income Statement and Statement of Cash Flows Chapter 04 The Income Statement and Statement of Cash Flows True / False Questions 1. Income from continuing operations sometimes includes gains from nonoperating activities. True False 2. Intraperiod tax allocation is the process of associating income tax effects with the income statement components that create those effects. True False 3. Material restructuring costs are reported as an element of income from continuing operations. True False 4. Earnings quality refers to the ability of reported earnings (income) to predict future earnings. True False 5. Gains, but not losses, from discontinued operations must be separately reported in an income statement. True False 6. An item must meet the subjective criteria of being either unusual or infrequent to be reported as extraordinary. True False 4-1 Chapter 04 - The Income Statement and Statement of Cash Flows 7. The definition of what constitutes an extraordinary item should be independent of the operating environment. True False 8. Income statements prepared according to both U.S. GAAP and International Financial Reporting Standards require the separate reporting, as an extraordinary item, of material gains and losses from events that are both unusual and infrequent. True False 9. A change in depreciation method is accounted for by retrospectively revising prior years' financial statements. True False 10. Changes in accounting estimates require disclosure of their effects, if material, on current year net income and EPS but do not require restatement of prior years' financial statements. True False 11. The income effect of a change in reporting entity is shown separately in the income statement in the year of the change. True False 12. EPS disclosure is required only for income from continuing operations. True False 13. Comprehensive income reports an expanded version of income to include certain types of gains and losses not included in traditional income statements. True False 4-2 Chapter 04 - The Income Statement and Statement of Cash Flows 14. Comprehensive income is the total change in shareholders' equity that occurred during the period. True False 15. The direct and indirect methods of reporting the statement of cash flows present different information for investing and financing activities. True False 16. International Financial Reporting Standards require a company to classify expenses in an income by function. True False 17. Under International Financial Reporting Standards, the components of other comprehensive income can be presented in the statement of shareholders' equity. True False 18. In a statement of cash flows prepared under International Financial Reporting Standards, interest received is most often classified as an operating cash flow....
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Chap004 - Chapter 04 - The Income Statement and Statement...

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