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Enter the letter corresponding to the response that best completes each of the following statements or questions.

1
Which of the following captions would more likely be found in a multiple-step income statement?
A)Total expenses.
B)Total revenues and gains.
C)Gross profit.
D)None of the above.
2
An item typically included in the income from continuing operations section of the income statement is:
A)Discontinued operations.
B)Extraordinary gain.
C)Prior period adjustment.
D)Restructuring costs.
3
The application of intraperiod income taxes requires that income taxes be apportioned to each of the following items except:
A)Income from continuing operations.
B)Operating income.
C)Discontinued operations.
D)Extraordinary gains and losses.
4
For a manufacturing company, all of the following items would be considered nonoperating income for income statement purposes except:
A)Income from investments.
B)Cost of goods sold.
C)Interest expense.
D)Gain on sale of operating assets.
5
On May 31, 2009, the Arlene Corporation adopted a plan to sell its cosmetics line of business, considered a component of the entity. The assets of the component were sold on October 13, 2009, for $1,120,000. The component generated operating income from January 1, 2009, through disposal of $300,000. In its income statement for the year ended December 31, 2009, the company reported before-tax income from operations of a discontinued component of $620,000. What was the book value of the assets of the cosmetics component?
A)$800,000
B)$1,420,000
C)$300,000
D)None of the above
6
The Compton Press Company reported income before taxes of $250,000. This amount included a $50,000 extraordinary loss. The amount reported as income before extraordinary items, assuming a tax rate of 40%, is:
A)$250,000
B)$180,000
C)$120,000
D)$150,000
7
Which of the following material items would not be reported as an extraordinary item?
A)A loss caused by an unusual and infrequent hurricane.
B)A loss caused by an unusual and infrequent volcano.
C)A loss caused by obsolescence of inventory.
D)All of the above would be reported as extraordinary items.
8
The Stibbe Construction Company switched from the completed contract method to the percentage-of-completion method of accounting for its long-term construction contracts. This is an example of:
A)A change in accounting principle.
B)A change in accounting estimate.
C)An infrequent but not unusual item.
D)An extraordinary item.
9
In 2009, the Perasso Meat Packing Company revised the useful life of its equipment from eight years to six years. Depreciation recorded in prior years on existing equipment was $126,000 applying the eight-year useful life. Depreciation in prior years would have been $186,000 if the six-year useful life had been used. Assuming an income tax rate of 40%, Perasso's increase in 2009's beginning retained earnings would be:
A)$60,000
B)$36,000
C)$24,000
D)Zero
10
Earnings per share should be reported for each of the following income statement captions except:
A)Income from continuing operations.
B)Extraordinary gains and losses.
C)Operating income.
D)Discontinued operations.
11

The following items appeared in the 2009 year-end trial balance for the Brown Coffee Company:

Debits

Credits

Revenues

$600,000

Operating expenses

$420,000

Gain from the early retirement of debt*

  200,000

Restructuring costs

  100,000

Interest expense

    20,000

Gain on sale of operating assets

    30,000

*Considered unusual and infrequent in this instance.

Income tax expense has not yet been accrued. The company's income tax rate is 40%. What amount should be reported in the company's year 2009 income statement as income before extraordinary items?
A)$90,000
B)$66,000
C)$34,800
D)$54,000
12
Selected information from the 2009 accounting records of Dunn's Auto Dealers is as follows:

Cost of furniture purchased for cash

$   8,000

Proceeds from bank loan

 100,000

Repayment of bank loan (includes interest of $4,000)

   44,000

Proceeds from sale of equipment

     5,000

Cash collected from customers

 320,000

Purchase of stock of another corporation as an investment

   20,000

Common stock issued for cash

 200,000


In its 2009 statement of cash flows, Dunn's should report net cash inflows from financing activities of:
A)$260,000
B)$265,000
C)$60,000
D)$256,000
13
Using the information in question 12, Dunn's should report net cash outflows from investing activities of:
A)$27,000
B)$32,000
C)$28,000
D)$23,000
14
Which of the following items would not be included as a cash flow from operating activities in a statement of cash flows?
A)Collections from customers.
B)Interest on note payable.
C)Purchase of equipment.
D)Purchase of inventory.





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