MULTIPLE CHOICE test 2 ch4-5

MULTIPLE CHOICE test 2 ch4-5 - MULTIPLE CHOICEConceptual...

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MULTIPLE CHOICE —Conceptual 21. The major elements of the income statement are a. revenue, cost of goods sold, selling expenses, and general expense. b. operating section, nonoperating section, discontinued operations, extraordinary items, and cumulative effect. c. revenues, expenses, gains, and losses. d. all of these. 22. Information in the income statement helps users to a. evaluate the past performance of the enterprise. b. provide a basis for predicting future performance. c. help assess the risk or uncertainty of achieving future cash flows. d. all of these. 23. Limitations of the income statement include all of the following except a. items that cannot be measured reliably are not reported. b. only actual amounts are reported in determining net income. c. income measurement involves judgment. d. income numbers are affected by the accounting methods employed. S 24. Which of the following would represent the least likely use of an income statement prepared for a business enterprise? a. Use by customers to determine a company's ability to provide needed goods and services. b. Use by labor unions to examine earnings closely as a basis for salary discussions. c. Use by government agencies to formulate tax and economic policy. d. Use by investors interested in the financial position of the entity. S 25. The income statement reveals a. resources and equities of a firm at a point in time. b. resources and equities of a firm for a period of time. c. net earnings (net income) of a firm at a point in time. d. net earnings (net income) of a firm for a period of time. 26. The single-step income statement emphasizes a. the gross profit figure. b. total revenues and total expenses. c. extraordinary items and accounting changes more than these are emphasized in the multiple-step income statement. d. the various components of income from continuing operations. 27. Which of the following is an acceptable method of presenting the income statement? a. A single-step income statement b. A multiple-step income statement c. A consolidated statement of income d. All of these 28. Which of the following is not a generally practiced method of presenting the income statement? a. Including prior period adjustments in determining net income
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b. The single-step income statement c. The consolidated statement of income d. Including gains and losses from discontinued operations of a component of a business in determining net income 29. The occurrence which most likely would have no effect on 2007 net income (assuming that all amounts involved are material) is the a. sale in 2007 of an office building contributed by a stockholder in 1983. b. collection in 2007 of a receivable from a customer whose account was written off in 2006 by a charge to the allowance account. c.
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MULTIPLE CHOICE test 2 ch4-5 - MULTIPLE CHOICEConceptual...

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