Question

Please Answer any of the questions. Thank you.

QUESTION 5

1. The operating activities section of the cash flows statements starts with net income:

	A.	When showing the direct method.
	B.	Under either method.
	C.	When showing the indirect method.
	D.	None of the above is correct.

QUESTION 4

1. Calstone, Inc. prepares an annual combined statement of income and comprehensive income. The appropriate reporting treatment for "The company wrote off $1,000,000 of obsolete inventory." will be:

	A.	As a component of operating income.
	B.	As a non-operating income item (other income or expense).
	C.	As a separately reported item.
	D.	As an item of other comprehensive income.
	E.	As an adjustment to retained earnings.

QUESTION 8

1. Calstone, Inc. prepares an annual combined statement of income and comprehensive income. The appropriate reporting treatment for "In 2014, a supply warehouse with an expected useful life of 7 years was expensed in error." will be:

	A.	As a component of operating income.
	B.	As a non-operating income item (other income or expense).
	C.	As a separately reported item.
	D.	As an item of other comprehensive income.
	E.	As an adjustment to retained earnings.

QUESTION 11

1. Calstone, Inc. prepares an annual combined statement of income and comprehensive income. The appropriate reporting treatment for "Interest expense of $500,000 was recorded." will be:

	A.	As a component of operating income.
	B.	As a non-operating of operating income.
	C.	As a separately reported item.
	D.	As an item of other comprehensive income.
	E.	As an adjustment to retained earnings.

QUESTION 22

1. Calstone, Inc. prepares an annual combined statement of income and comprehensive income. The appropriate reporting treatment for "Restructuring costs were incurred." will be:

	A.	As a component of operating income.
	B.	As a non-operating income item (other income or expense).
	C.	As a separately reported item.
	D.	As an item of other comprehensive income.
	E.	As an adjustment to retained earnings.

QUESTION 23

1. Calstone, Inc. prepares an annual combined statement of income and comprehensive income. The appropriate reporting treatment for "A gain from the sale of equipment was recognized" will be:

	A.	As a component of operating income.
	B.	As a non-operating income item (other income or expense).
	C.	As a separately reported item.
	D.	As an item of other comprehensive income.
	E.	As an adjustment to retained earnings.

QUESTION 13

1. Orca Co. decided to change from the FIFO method for inventory to the weighted-average method. The effect of this accounting change should be reported as:

	A.	a prior period adjustment.
	B.	restatement of the prior year's financial statement.
	C.	a component of other comprehensive income.
	D.	none of these—the effect is recorded prospectively.

QUESTION 25

1. Calstone, Inc. prepares an annual combined statement of income and comprehensive income. The appropriate reporting treatment for "A flood destroyed a warehouse that had a book value of $1,600,000." will be:

	A.	As a component of operating income.
	B.	As a non-operating income item (other income or expense).
	C.	As a separately reported item.
	D.	As an item of other comprehensive income.
	E.	As an adjustment to retained earnings.

QUESTION 34

1. Calstone, Inc. prepares an annual combined statement of income and comprehensive income. The appropriate reporting treatment for "Losses from foreign currency translation were recognized" will be:

	A.	As a component of operating income.
	B.	As a non-operating income item (other income or expense).
	C.	As a separately reported item.
	D.	As an item of other comprehensive income.
	E.	As an adjustment to retained earnings.

QUESTION 3

1. Calstone, Inc. prepares an annual combined statement of income and comprehensive income. The appropriate reporting treatment for "Unrealized gains on investments accounted for as securities available for sale were recorded." will be:

	A.	As a component of operating income.
	B.	As a non-operating income item (other income or expense).
	C.	As a separately reported item.
	D.	As an item of other comprehensive income.
	E.	As an adjustment to retained earnings.

Answer 1

Answer 5

C.	When showing the indirect method.

As

Under Indirect method net income is first adjusted for non cash and non operating expenses and incomes to calculate cash from operating activities