Income Statement

Question 1

What is operating margin

Answer 1

excess of operating rev over operating expenses

Question 2

Income Statement presentation

Answer 2

Single Step:Total revenues and gains
less total exp and losses
multiple step: NetSales
less COGS
= Gross profit/margin
- operating Exp
+/-Other Income/expenses
=Inc from continuing operations bef tax
-Income taxes
=Inc from continuing operations
-Discontinue operations
= NI

Question 3

OCI “ not included in the IS

“net Income+OCI= comphrensive income

Answer 3

Prior period adj
Foreign currc translation
Unrealized gains and losses on avbl for Sale(AFS) securt
unrecognized pension items
Cumulative effect of changes in acct principle
Unrealized G/L on cash flow hedges- derivative

Question 4

IS presentation

Answer 4

Income from continuing operations
Income from discontinuing operationsw (net of tax) (GAAP detail reporting)
Net Income

Question 5

Intraperiod tax allocations

Answer 5

Pertain to the tax effects for only one year req that cumulative effect of acct princl changes be reported net of tax

Question 6

Revenues

Answer 6

increases in net A or settlmt of L from primary activt providing goods and svc

Question 7

expenses

Answer 7

decreases in net A or settlmt of L from primary activt providing goods and svc

Question 8

Gains

Answer 8

Increase in net assets from incidental or peripheral actv

Question 9

Losses

Answer 9

decrease in net assets from incidental or peripheral actv

Question 10

Changes in Acct Principle

Answer 10

Is accounted by retrospective application to all prior periods, unless impractiable, treated as adj in RE

Question 11

unusual items in nature or infrequent in occurrence not meeting the criteria of extraordinary item (ASU 2015-1 discontinue net of tax)

Answer 11

are to be disclose separately in the operating section of the Is Not net of taxes, and supplm by a footnote

Question 12

COGS

Answer 12

Beg. Inventory
+ Purchases during the period
-Ending Inventory

Question 13

Changes in estimate

Answer 13

Should be handle as a prospective basis (chgs in depc method)

Question 14

EPS

Answer 14

separate calculations are not required for other comprehensive income or comprehensive income

Question 15

COGS (manufature)

Answer 15

Direct Materials
Beg Raw materials Inv
\+ Purchases of raw materials
- End Raw materials Inv
= direct material production

Direct Labor
+ Manufacturing Overhead
Total Manufacturing Cost

\+Beg WIP Inv       
-ending WIP inv
= Cost of goods manufactures x the yr
\+Beg Finishes Goods Inventory
-End finished goods inv
=COGS

Question 16

Extraordinary and unusual items

Answer 16

must be reported in a separate line item apprearing withing income from continuing operations,
Net of tax has been ELIMINATED

Question 17

IS is all inclusive except for

Answer 17

-Prior period adj shown in Stmt or RE

OCI

Question 18

Prior period adjustmens

Answer 18

correction of Acct errors affecting income of prior yeasr, reported in RE

Question 19

income statment presentation

Answer 19

Co XXXX
IS
For yr ended xx 31 xxx

 Net sales
-COGS
=Gross Margin
\+misc Rev and gains
-misc exp and losses
\+- Unusual or infrequent items
= Income from continuing operations before tax
- Income tax Expense
= income from continuing operation after tax
-+Income from discontinued operations