1.02 INCOME STATEMENT

Question 1

Single-Step

Answer 1

revenues & gains - expenses & losses = income before tax - tax = income from continuing operations

Question 2

Multi-Step

Answer 2

Sales - COGS = GP - Selling & Admin Expenses = Operating Income + Gains - Losses = Income Before Tax - Tax = Income from Continuing Operations

Question 3

Discontinued Operations are presented

Answer 3

separately and net of tax

Question 4

A disposal is reported as a discontinued operation when

Answer 4

it represents a strategic shift that will have a significant effect on the entity’s operations and financial results

Question 5

When a foreign currency receivable or payable hits the books, record

Answer 5

at the exchange rate on the date of the transaction

Question 6

When the foreign currency receivable or payable is settled, record

Answer 6

the gain or loss if the exchange rate has changed

Question 7

If a foreign currency receivable or payable exists at the balance sheet date,

Answer 7

change to exchange rate at the balance sheet date

Question 8

If the dollar weakens, the foreign currency will

Answer 8

purchase more dollars

Question 9

If the dollar strengthens, the foreign currency will

Answer 9

purchase fewer dollars

Question 10

Direct Quotation

Answer 10

states the domestic price first

Question 11

Freight out is a

Answer 11

Selling expense

Question 12

Gains and losses are included in

Answer 12

Income before taxes

Question 13

Discontinued operation gain/loss

Answer 13

Income/loss from operation + gain/loss from sale