Income statement and OCI

Question 1

Where is Transaction loss reported?

Answer 1

TRANSACTION LOSS/GAIN is part of NI
TRANSLATION LOSS is part of OCI

Question 2

True or False: Gain on sale of asset will be part of NI while calculating NI

Answer 2

True

Question 3

Disposal of Segment - where is estimated gain reported under discontinued operations?

Answer 3

Estimated disposal gains are not recognized only estimated losses are recognized.

Question 4

Freight in is part of purchases while calculating ______ and freight out is part of _________

Answer 4

Freight In - COGS
Freight Out - Selling expenses

Question 5

Insurance is part of ___________

Answer 5

General and Administrative expenses

Question 6

True or False: NI includes Gain from discontinued operations net of tax as a separate line item.

Answer 6

True

Question 7

COGS alternate formula

Answer 7

Cost of Goods Manufactured less Decrease in finished goods inventory

Question 8

Raw materials used formula (while calculating COGS)

Answer 8

Raw materials purchased less increase in raw materials inventory

Question 9

What is AOCI?

Answer 9

AOCI is the collective amount of OCI at a specific time and is reported on the balance sheet. At the end of every period, OCI (temp a/c) is transferred and closed to AOCI (permanent a/c) just like close of NI to retained earnings.

Question 10

Which changes in pension plan are included in OCI?

Answer 10

Changes in the PROJECTED BEENFIT obligation (PBO) (not the accumulated benefit obligation) and the FV of the pension plan assets are included in OCI.

Question 11

INCOME STATEMENT FORMAT

Net Sales Revenue less:Discounts less:returns XX
Less: COGS XX
=Gross Profit XX

Expense:
Salaries Expense XX
Rent Expense XX
Insurance Expense (operating exp.) XX
Depreciation Expense (operating exp) XX

Income from Operations= Gross profit less all expenses

Other Revenue and Gains
Interest Revenue XX
Dividend Revenue (Current year) XX
Gain on Sale of equipment XX

Other expenses and Losses
Interest Expense XX

Income from Continuing Operations before taxes (net of above items)

Less: Income tax expense XX

Income from Continuing operations XX

Gain from disposal of discontinued segment, net of tax XX

NET INCOME (Net of above items) xx

Answer 11

True

Question 12

Direct quote in GBP for exchange rate

Answer 12

0.63 GBP equal to 1 USD

Question 13

Comprehensive income will include loss on _________

Answer 13

DISCONTINUED OPERATIONS

Question 14

Comprehensive income

Answer 14

= NI + OCI

Question 15

Only changes in OCI will impact the balances in AOCI, net income changes will not

Question 16

OCI will close to AOCI and AOCI closes to _________

Answer 16

Balance sheet

Question 17

NI is closed to ____________

Answer 17

Retained Earnings

Question 18

Projected losses of year 2 are not accrued in Yr 1

Question 19

EPS must not include any item of OCI

Answer 19

Regardless of the method used, companies can choose to report items net of tax or tax related to all comprehensive items must be included on one line

Question 20

Comprehensive includes only nonowner changes in equity only and to summarize all changes in equity from nonowner sources

Answer 20

Stock

Question 21

Overstatement of depreciation in year 9 by 20,000

Answer 21

Increase RE by $20,000 in year 10 and
Increase Equipment value by $20,000

Question 22

Cash flow Hedge is part of ______________

Answer 22

OCI