Question

Multiple Choice Questions (circle the one most appropriate answer)

10.

A correction of an error in prior periods' income will be reported:        In the current income statement          Net of tax A.                  Yes                                            Yes B.                   No                                              No C.                  Yes                                             No D.                   No                                            Yes

11.

For Viggo Company, the following information is available: Cost of goods sold $340,000 Dividend revenue 30,000 Income tax expense 34,000 Operating expenses 210,000 Sales revenue 690,000 In Viggo’s multiple-step income statement, gross profit A. should NOT be reported. B. should be reported at $136,000. C. should be reported at $350,000. D. should be reported at $380,000.

12.	Benedict Corporation reports the following information:: Net income $750,000 Dividends on common stock $210,000 Dividends on preferred stock $ 90,000 Weighted average common shares outstanding 250,000 Benedict should report earnings per share of A. $1.80. B. $2.16. C. $2.64. D. $3.00.

Answer 1

10.

D.	In current income statement No Net of tax Yes

Prior period adjustments are done in retained earnings net of taxes an not in income statement

11.

C.	should be reported at $350,000

Sales revenue $690,000

Less: cost of goods sold 340,000

Gross Profit $350,000

Gross profit is shown in multi step income statement

12.

C.

$2.64.

Net income $750,000

Less: Preferred dstock dividend 90,000

Income available for common stock holders $660,000

Weighted average common shares 250,000

Earnings per share ($660,000/250,000) $2.64