Ch. 4 (IFSA) Summary

Question 1

___ presents revenue, expenses, and net income.

Answer 1

The income statement

Question 2

The income statement presents ___, expenses, and net income.

Answer 2

revenue

Question 3

The income statement presents revenue, ___, and net income.

Answer 3

expenses

Question 4

The income statement presents revenue, expenses, and ___.

Answer 4

net income

Question 5

The components of ___ include:
- revenue
- cost of sales
- sales, general, and administrative expenses
- other operating expenses
- nonoperating income and expenses
- gains and losses
- nonrecurring items
- net income
- EPS

Answer 5

the income statement

Question 6

The components of the income statement include:
- ___
- cost of sales
- sales, general, and administrative expenses
- other operating expenses
- nonoperating income and expenses
- gains and losses
- nonrecurring items
- net income
- EPS

Answer 6

revenue

Question 7

The components of the income statement include:
- revenue
- ___
- sales, general, and administrative expenses
- other operating expenses
- nonoperating income and expenses
- gains and losses
- nonrecurring items
- net income
- EPS

Answer 7

cost of sales

Question 8

The components of the income statement include:
- revenue
- cost of sales
- ___
- other operating expenses
- nonoperating income and expenses
- gains and losses
- nonrecurring items
- net income
- EPS

Answer 8

sales, general, and administrative expenses

Question 9

The components of the income statement include:
- revenue
- cost of sales
- sales, general, and administrative expenses
- ___
- nonoperating income and expenses
- gains and losses
- nonrecurring items
- net income
- EPS

Answer 9

other operating expenses

Question 10

The components of the income statement include:
- revenue
- cost of sales
- sales, general, and administrative expenses
- other operating expenses
- ___
- gains and losses
- nonrecurring items
- net income
- EPS

Answer 10

nonoperating income and expenses

Question 11

The components of the income statement include:
- revenue
- cost of sales
- sales, general, and administrative expenses
- other operating expenses
- nonoperating income and expenses
- ___
- nonrecurring items
- net income
- EPS

Answer 11

gains and losses

Question 12

The components of the income statement include:
- revenue
- cost of sales
- sales, general, and administrative expenses
- other operating expenses
- nonoperating income and expenses
- gains and losses
- ___
- net income
- EPS

Answer 12

nonrecurring items

Question 13

The components of the income statement include:
- revenue
- cost of sales
- sales, general, and administrative expenses
- other operating expenses
- nonoperating income and expenses
- gains and losses
- nonrecurring items
- ___
- EPS

Answer 13

net income

Question 14

The components of the income statement include:
- revenue
- cost of sales
- sales, general, and administrative expenses
- other operating expenses
- nonoperating income and expenses
- gains and losses
- nonrecurring items
- net income
- ___

Answer 14

EPS

Question 15

___ that presents a subtotal for gross profit (revenue minus cost of goods sold) is said to be presented in a multi-step format. One that does not present this subtotal is said to be presented in a single-step format.

Answer 15

An income statement

Question 16

An income statement that presents a subtotal for ___ (revenue minus cost of goods sold) is said to be presented in a multi-step format. One that does not present this subtotal is said to be presented in a single-step format.

Answer 16

gross profit

Question 17

An income statement that presents a subtotal for gross profit (___) is said to be presented in a multi-step format. One that does not present this subtotal is said to be presented in a single-step format.

Answer 17

revenue minus cost of goods sold

Question 18

An income statement that presents a subtotal for gross profit (revenue minus cost of goods sold) is said to be presented in ___ format. One that does not present this subtotal is said to be presented in a single-step format.

Answer 18

a multi-step

Question 19

An income statement that presents a subtotal for gross profit (revenue minus cost of goods sold) is said to be presented in a multi-step format. One that does not present this subtotal is said to be presented in ___ format.

Answer 19

a single-step

Question 20

___ is recognized in the period it is earned, which may or may not be in the same period as the related cash collection. Recognition of revenue when earned is a fundamental principal of accrual accounting.

Answer 20

Revenue

Question 21

Revenue is recognized in ___, which may or may not be in the same period as the related cash collection. Recognition of revenue when earned is a fundamental principal of accrual accounting.

Answer 21

the period it is earned

Question 22

Revenue is recognized in the period it is earned, which ___. Recognition of revenue when earned is a fundamental principal of accrual accounting.

Answer 22

may or may not be in the same period as the related cash collection

Question 23

Revenue is recognized in the period it is earned, which may or may not be in the same period as the related cash collection. Recognition of revenue when earned is a fundamental principal of ___.

Answer 23

accrual accounting

Question 24

In limited circumstances, ___ may be applicable, including:
- percentage of completion
- completed contract
- installment sales
- cost recovery.

Answer 24

specific revenue recognition methods

Question 25

In limited circumstances, specific revenue recognition methods may be applicable, including:
- ___
- completed contract
- installment sales
- cost recovery.

Answer 25

percentage of completion

Question 26

In limited circumstances, specific revenue recognition methods may be applicable, including:
- percentage of completion
- ___
- installment sales
- cost recovery.

Answer 26

completed contract

Question 27

In limited circumstances, specific revenue recognition methods may be applicable, including:
- percentage of completion
- completed contract
- ___
- cost recovery.

Answer 27

installment sales

Question 28

In limited circumstances, specific revenue recognition methods may be applicable, including:
- percentage of completion
- completed contract
- installment sales
- ___.

Answer 28

cost recovery

Question 29

An analyst should ___ and adjust reported revenue where possible to facilitate comparability. Where the available information does not permit adjustment, an analyst can characterize the revenue recognition as more or less conservative and thus qualitatively assess how differences in policies might affect financial ratios and judgments about profitability.

Answer 29

identify differences in companies’ revenue recognition methods

Question 30

An analyst should identify differences in companies’ revenue recognition methods and ___. Where the available information does not permit adjustment, an analyst can characterize the revenue recognition as more or less conservative and thus qualitatively assess how differences in policies might affect financial ratios and judgments about profitability.

Answer 30

adjust reported revenue where possible to facilitate comparability

Question 31

An analyst should identify differences in companies’ revenue recognition methods and adjust reported revenue where possible to facilitate comparability. Where the available information does not permit adjustment, an analyst can characterize the revenue recognition as ___ and thus qualitatively assess how differences in policies might affect financial ratios and judgments about profitability.

Answer 31

more or less conservative

Question 32

An analyst should identify differences in companies’ revenue recognition methods and adjust reported revenue where possible to facilitate comparability. Where the available information does not permit adjustment, an analyst can characterize the revenue recognition as more or less conservative and thus qualitatively assess how differences in policies might affect ___.

Answer 32

financial ratios and judgments about profitability

Question 33

___ include the matching principle. Expenses are matched either to revenue or to the time period in which the expenditure occurs (period costs) or to the time period of expected benefits of the expenditures (e.g. depreciation).

Answer 33

The general principles of expense recognition

Question 34

The general principles of expense recognition include ___. Expenses are matched either to revenue or to the time period in which the expenditure occurs (period costs) or to the time period of expected benefits of the expenditures (e.g. depreciation).

Answer 34

the matching principle

Question 35

The general principles of expense recognition include the matching principle. Expenses are matched either to ___ or to the time period in which the expenditure occurs (period costs) or to the time period of expected benefits of the expenditures (e.g. depreciation).

Answer 35

revenue

Question 36

The general principles of expense recognition include the matching principle. Expenses are matched either to revenue or ___ (period costs) or to the time period of expected benefits of the expenditures (e.g. depreciation).

Answer 36

to the time period in which the expenditure occurs

Question 37

The general principles of expense recognition include the matching principle. Expenses are matched either to revenue or to the time period in which the expenditure occurs (___) or to the time period of expected benefits of the expenditures (e.g. depreciation).

Answer 37

period costs

Question 38

The general principles of expense recognition include the matching principle. Expenses are matched either to revenue or to the time period in which the expenditure occurs (period costs) or ___ (e.g. depreciation).

Answer 38

to the time period of expected benefits of the expenditures

Question 39

The general principles of expense recognition include the matching principle. Expenses are matched either to revenue or to the time period in which the expenditure occurs (period costs) or to the time period of expected benefits of the expenditures (e.g. ___).

Answer 39

depreciation