019 Income Stmt 1

Question 1

Does accounting income take a transactions-based determination of income or a change in net worth? .

Answer 1

Accounting income is transaction based

Question 2

What represent increases in net assets or settlements of liabilities by providing goods and services?

Answer 2

Revenues.

Question 3

Define “losses”.

Answer 3

Decreases in equity or net assets from peripheral or incidental transactions.

Question 4

Define “gains”.

Answer 4

Increases in equity or net assets from peripheral or incidental transactions.

Question 5

Define “expenses”.

Answer 5

Decreases in net assets or incurrence of liabilities through the provision of goods or services.

Question 6

What items are not shown on the income statement?

Answer 6

1 Prior period adjustments; 2 Foreign currency translation adjustments; 3 Unrealized gains and losses on available for sale (AFS) securities; 4 Unrecognized pension items; 5 Cumulative effect of changes in accounting principle; 6 Unrealized gains and losses on cash flow hedges.

Question 7

What is economic income?

Answer 7

The change in the net worth of a business enterprise during an accounting period.

Question 8

How are unusual or infrequent items reported?

Answer 8

They must be separately reported if material as a component of income from continuing operations.

Question 9

What is the order of income statement presentation?

Answer 9

1 Income from Continuing Operations 2 Income from Discontinued Operations (net of tax); 3 Extraordinary Items (net of tax); 4 Net Income.