Question 1

The FASB requires that ________ and ________ need to be separated from the regular earnings of a business.

Accepted Answer

The FASB requires that extraordinary items and discontinued operations need to be separated from the regular earnings of a business. Option A is incorrect as it includes "other revenues and expenses" which is not required to be separated. Option B is incorrect as it includes only one of the required items, and option D is incorrect as it includes changes in accounting principle which is not one of the required items.

Question 2

When a company disposes of a segment of a business,the resulting gain or loss on disposal is reported as part of ________.

Accepted Answer

The gain or loss on disposal of a segment of a business is reported as part of discontinued operations, which includes the results of operations of a component of an entity that has been disposed of or is held for sale.

Question 3

The financial statements used to analyze companies include all of these statements $\bold{EXCEPT}$ the ________.

Accepted Answer

The correct statement is the statement of shareholders' equity, not the statement of shareholders' rights. The other three statements (balance sheet, income statement, and statement of cash flows) are all commonly used financial statements for analyzing companies.

Question 4

Which of the following items affects total shareholders' equity without being reported on the income statement?

Accepted Answer

Purchase of treasury stock is a transaction that affects the number of outstanding shares of a company, which in turn affects the calculation of total shareholders' equity. However, it is not a transaction that is reported on the income statement. Extraordinary items, discontinued operations, and repayment of long-term debt are all reported on the income statement and directly affect net income or loss, which in turn affects shareholders' equity.

Question 5

Items that are both unusual in nature and infrequent in occurrence are considered ________.

Accepted Answer

Extraordinary items are items that are both unusual in nature and infrequent in occurrence. Discontinued operations refer to the disposal of a significant component of a company's operations, while items of other revenues and expenses are classified separately on the income statement. Changes in continuing operations refer to changes in the normal course of a company's operations.

Question 6

Team Shirts sold its surfboard operations for $125,000 and incurred a loss of $47,000 on the sale.This loss would be reported on the income statement as part of ________.

Accepted Answer

The loss on the sale of the surfboard operations is considered a discontinued operation, which is a major component of a company's operations that has been disposed of or is being held for sale. It should be reported separately on the income statement as a part of discontinued operations.

Question 7

When a company disposes of a segment of a business,this year's operating income or loss from the segment is reported as part of ________.

Accepted Answer

When a company disposes of a segment of a business, the operating income or loss from that segment for this year is reported as part of discontinued operations in the financial statements.

Question 8

A tornado in New York City caused $48,000 worth of damage to Out of Africa's store and merchandise.The insurance company paid the business $50,000.The $2,000 gain would be reported on the income statement as part of ________.

Accepted Answer

The answer of A tornado in New York City caused...

Question 9

A gain or loss from discontinued operations is treated on the income statement as a ________.

Accepted Answer

A gain or loss from discontinued operations is presented as a separate line item on the income statement, net of taxes. This allows for better transparency and understanding of the financial impact of discontinuing a segment of the business.

Question 10

Lee's Lions had to shut down its store in Houston on July 31.This year's operating income or loss from the store before July 31 would be reported on the income statement as part of ________.

Accepted Answer

The store closure is a result of discontinuing operations, as it is no longer a part of Lee's Lions ongoing business activities. Therefore, any income or loss from the store before July 31 would be reported as part of discontinued operations on the income statement.

Question 11

Extraordinary items need to be treated separately from regular business operations on the ________.

Accepted Answer

Extraordinary items are usually items that are not a part of the regular business operations and do not occur on a regular basis. Therefore, they should be treated separately on the income statement to give a clearer view of the company's regular operations. The balance sheet, statement of cash flows, and statement of changes in shareholders' equity do not typically show extraordinary items.

Question 12

Generally accepted accounting principles require that discontinued operations be reported as ________.

Accepted Answer

Discontinued operations are reported as an after-tax line item separate from continuing operations to clearly distinguish the results of ongoing operations from those that are not expected to continue.

Question 13

Hurricane Octavio caused $14,500 worth of damage to a warehouse in Idaho owned by Team Shirts.This loss would be reported on the income statement as part of ________.

Accepted Answer

Hurricane Octavio causing $14,500 worth of damage to a warehouse is an unusual and infrequent event outside the company's normal course of business. Thus, it would be reported as an extraordinary item on the income statement.

Question 14

On June 1,Team Shirts sold its surfboard operations and incurred a loss on the sale.This year's operating income or loss from surfboard operations before June 1 would be reported on the income statement as part of ________.

Accepted Answer

The loss from the sale of the surfboard operations, along with the operating income or loss from those operations before the sale, would be reported as part of discontinued operations on the income statement. This is because the sale represents a strategic shift that has a major effect on the company's operations and financial results.

Question 15

Hurricane Octavio caused $14,500 worth of damage to a warehouse in Miami owned by Team Shirts.This loss would be reported on the income statement as part of ________.

Accepted Answer

The damage caused by Hurricane Octavio would be reported as part of income from continuing operations because it is a loss related to the normal business operations, not extraordinary or discontinued operations.

Question 16

Which of the following items affects retained earnings but does not affect net income?

Accepted Answer

Declaring dividends reduces retained earnings, but does not affect net income. Extraordinary items, discontinued operations and issuing stock can impact both retained earnings and net income.

Question 17

Discontinued operations need to be treated separately from regular business operations on the ________.

Accepted Answer

Discontinued operations should be shown separately on the income statement to provide users of financial statements with more transparency and clarity regarding the impact of these operations on the overall financial performance of the company. The balance sheet, statement of cash flows, and statement of financial position may include information related to discontinued operations, but they are not the primary statements used to report on these activities.

Question 18

Lee's Lions had to shut down its store in Houston.There was no buyer,so Lee's Lions sold the store equipment and closed out the business at a loss.This loss would be reported on the income statement as part of ________.

Accepted Answer

The closure of the store constitutes as discontinued operations, which is when a company ceases operations of a component of its business and it meets certain criteria, such as being a strategic shift that has a major effect on the company's operations and financial results. The loss from this event would be reported separately on the income statement as part of discontinued operations.

Question 19

Team Shirts sold its surfboard operations for $125,000 and made a profit of $12,000 on the sale.This gain would be reported on the income statement as part of ________.

Accepted Answer

The gain from the sale of the surfboard operations would be reported as part of discontinued operations because it involves the disposal of a component of the business.

Question 20

Extraordinary items are reported on the income statement as ________.

Accepted Answer

Extraordinary items are reported separately on the income statement, after income from continuing operations and after any discontinued operations. This is because they are rare and unusual in nature, and therefore should not be included in the regular operations of the company. They are reported below the line for income from continuing operations, in order to differentiate them from regular business activities.

Quiz 10: Using Financial Statement Analysis to Evaluate Firm Performance

The FASB requires that and need to be separated from the regular earnings of a business.

When a company disposes of a segment of a business,the resulting gain or loss on disposal is reported as part of ________.

The financial statements used to analyze companies include all of these statements $\bold{EXCEPT}$ the ________.

Which of the following items affects total shareholders' equity without being reported on the income statement?

Items that are both unusual in nature and infrequent in occurrence are considered ________.

Team Shirts sold its surfboard operations for $125,000 and incurred a loss of $47,000 on the sale.This loss would be reported on the income statement as part of ________.

When a company disposes of a segment of a business,this year's operating income or loss from the segment is reported as part of ________.

A tornado in New York City caused $48,000 worth of damage to Out of Africa's store and merchandise.The insurance company paid the business $50,000.The $2,000 gain would be reported on the income statement as part of ________.

A gain or loss from discontinued operations is treated on the income statement as a ________.

Lee's Lions had to shut down its store in Houston on July 31.This year's operating income or loss from the store before July 31 would be reported on the income statement as part of ________.

Extraordinary items need to be treated separately from regular business operations on the ________.

Generally accepted accounting principles require that discontinued operations be reported as ________.

Hurricane Octavio caused $14,500 worth of damage to a warehouse in Idaho owned by Team Shirts.This loss would be reported on the income statement as part of ________.

On June 1,Team Shirts sold its surfboard operations and incurred a loss on the sale.This year's operating income or loss from surfboard operations before June 1 would be reported on the income statement as part of ________.

Hurricane Octavio caused $14,500 worth of damage to a warehouse in Miami owned by Team Shirts.This loss would be reported on the income statement as part of ________.

Which of the following items affects retained earnings but does not affect net income?

Discontinued operations need to be treated separately from regular business operations on the ________.

Lee's Lions had to shut down its store in Houston.There was no buyer,so Lee's Lions sold the store equipment and closed out the business at a loss.This loss would be reported on the income statement as part of ________.

Team Shirts sold its surfboard operations for $125,000 and made a profit of $12,000 on the sale.This gain would be reported on the income statement as part of ________.

Extraordinary items are reported on the income statement as ________.

Quiz 10: Using Financial Statement Analysis to Evaluate Firm Performance

The FASB requires that ________ and ________ need to be separated from the regular earnings of a business.

When a company disposes of a segment of a business,the resulting gain or loss on disposal is reported as part of ________.

The financial statements used to analyze companies include all of these statements EXCEPT\bold{EXCEPT}EXCEPT the ________.

Which of the following items affects total shareholders' equity without being reported on the income statement?

Items that are both unusual in nature and infrequent in occurrence are considered ________.

Team Shirts sold its surfboard operations for $125,000 and incurred a loss of $47,000 on the sale.This loss would be reported on the income statement as part of ________.

When a company disposes of a segment of a business,this year's operating income or loss from the segment is reported as part of ________.

A tornado in New York City caused $48,000 worth of damage to Out of Africa's store and merchandise.The insurance company paid the business $50,000.The $2,000 gain would be reported on the income statement as part of ________.

A gain or loss from discontinued operations is treated on the income statement as a ________.

Lee's Lions had to shut down its store in Houston on July 31.This year's operating income or loss from the store before July 31 would be reported on the income statement as part of ________.

Extraordinary items need to be treated separately from regular business operations on the ________.

Generally accepted accounting principles require that discontinued operations be reported as ________.

Hurricane Octavio caused $14,500 worth of damage to a warehouse in Idaho owned by Team Shirts.This loss would be reported on the income statement as part of ________.

On June 1,Team Shirts sold its surfboard operations and incurred a loss on the sale.This year's operating income or loss from surfboard operations before June 1 would be reported on the income statement as part of ________.

Hurricane Octavio caused $14,500 worth of damage to a warehouse in Miami owned by Team Shirts.This loss would be reported on the income statement as part of ________.

Which of the following items affects retained earnings but does not affect net income?

Discontinued operations need to be treated separately from regular business operations on the ________.

Lee's Lions had to shut down its store in Houston.There was no buyer,so Lee's Lions sold the store equipment and closed out the business at a loss.This loss would be reported on the income statement as part of ________.

Team Shirts sold its surfboard operations for $125,000 and made a profit of $12,000 on the sale.This gain would be reported on the income statement as part of ________.

Extraordinary items are reported on the income statement as ________.

The FASB requires that and need to be separated from the regular earnings of a business.

The financial statements used to analyze companies include all of these statements $\bold{EXCEPT}$ the ________.