Question

Hi, Please explain the principle for the below-corrected questions.

Thanks

61. Which one of the following types of losses is excluded from the determination of net income in income statements?

a.   Material losses resulting from transactions in the company's investments account.

b.   Material losses resulting from unusual sales of assets not acquired for resale.

c.   Material losses resulting from the write-off of intangibles.

d.   Material losses resulting from correction of errors related to prior periods.

67. Gains and losses identified as other comprehensive income have the same status as traditional gains and losses under

a.   both the one statement and two statement approaches.

b.   neither the one statement or two statement approaches.

c.   the one statement approach.

d.   the two statement approach.

74.     The following information was extracted from the 2014 financial statements of Max Company:

Income from continuing operations before income tax                                                               $470,000

Selling and administrative expenses            320,000

Income from continuing operations              329,000

Gross profit                                                   900,000

Income before extraordinary item                290,000

The amount reported for other expenses and losses is

a.   $141,000

b.   $39,000.

c.   $110,000.

d.   $150,000.

63.     A company is not required to report a per share amount on the face of the income statement for which one of the following items?

a.   Net income

b.   Prior period adjustment

c.   Extraordinary item

d.   Discontinued operations

77.     Manning Company has the following items: write-down of inventories, $360,000; loss on disposal of Sports Division, $555,000; and loss due to strike, $359,000. Ignoring income taxes, what amount should Manning Company report as extraordinary losses?

a.   $ -0-.

b.   $555,000.

c.   $719,000.

d.   $914,000.

Answer 1

61)

The adjustments to correct the prior period errors are adjusted against retained earnings and have no effect on the current period income statement.

Thus prior period error adjustment will not have any effect on net income.

Hence the option (d) is correct.