Question

se Moua 7. The term "comprehensive income" as defined by the FASB a, must be reported on the face of the income statement includes all changes in equity during a period except those resulting from nvestments by and distributions to owners. is the net change in owners' equity for the period. d. is synonymous with the term "net income." 8. Costs that can be reasonably associated with specific revenues but NOT with specific products should be charged to expense in the period incurred. 6. allocated to specific products based on the best estimate of the production processing time. C. expensed in the period in which the related revenue is recognized (d capitalized and then amortized over a period not to exceed 60 months. 9. In contrast with a multiple-step income statement, a single-step income statement does not show the amount of a income taxes on continuing operations. p cost of goods sold. X gross profit Id. earnings per share. 10. Which of the following principles best describes the rationale for matching administrative and selling expenses with revenues of the current period? a Direct matching by Systematic and rational allocation Immediate recognition d. Partial recognition

Answer 1

7. Comprehensive income by FASB

Comprehensive income is the net change in equity for a period not including any owner contributions or distributions. In other words, it includes all revenues, gains, expenses, and losses incurred during a period as well as unrealized gains and losses during an accounting period.

So option (b) is correct.

8. (c)

Expensed in the period in which the related revenue is recognized.

(matching principle) The matching concept is an accounting principle that requires the identification and recording of expenses associated with revenue earned and recognized during the same accounting period. Accordingly, under the matching concept the expenses of a particular accounting period are the costs of the assets used to earn the revenue that is recognized in that period. It follows, therefore, that when expenses in a period are matched with the revenues generated for the same period, the result is the net income or loss for that period.

9. (c)

The single-step income statement is an income statement that shows only revenues less expenses and does not include gross profit. It uses just one subtraction in order to calculate net income.

Net Income=(Revenue + Gains)−(Expenses + Losses).

Single step income statement is a financial statement format that lists all expenses including cost of good sold in one column. In other words, the single step income statement presentation doesn’t break expenses out into categories like cost of goods sold, operating, non-operating, and other.

10.  ( c ) Expense recognition principle

  The expense recognition principle states that expenses should be recognized in the same period as the revenues to which they relate. If this were not the case, expenses would likely be recognized as incurred, which might predate or follow the period in which the related amount of revenue is recognized.

So, immediate recognition.