Income Statements & Analysis - CPA Financial Accounting and Reporting (FAR)
Card 1 of 56
Barr Company had the following account balances at the end of Year 1: sales of $250,000; cost of goods sold of $90,000; salaries and wages of $30,000; rent expense of $15,000; advertising costs of $25,000; fixed assets purchased $50,000. What was Barr's net income for Year 1?
Barr Company had the following account balances at the end of Year 1: sales of $250,000; cost of goods sold of $90,000; salaries and wages of $30,000; rent expense of $15,000; advertising costs of $25,000; fixed assets purchased $50,000. What was Barr's net income for Year 1?
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Net income is calculated by taking sales of $250K - COGS of $90K - salaries of $30K - rent of $15K - advertising of $25K.
Net income is calculated by taking sales of $250K - COGS of $90K - salaries of $30K - rent of $15K - advertising of $25K.
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Colt, Inc had the following account balances at the end of Year 3: consulting revenue of $60,000; rent expense of $15,000; software licensing fees of $5,000; dividends paid of $12,000; and advertising expenses of $25,000. What was Colt's net income in Year ?
Colt, Inc had the following account balances at the end of Year 3: consulting revenue of $60,000; rent expense of $15,000; software licensing fees of $5,000; dividends paid of $12,000; and advertising expenses of $25,000. What was Colt's net income in Year ?
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Net income is calculated by taking revenue of $60K - rent of $15K - licensing fees of $5K - advertising of $25K.
Net income is calculated by taking revenue of $60K - rent of $15K - licensing fees of $5K - advertising of $25K.
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Which of the following items would not be included in operating income?
Which of the following items would not be included in operating income?
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Operating income only includes revenues and expenses directly related to the company's primary operations.
Operating income only includes revenues and expenses directly related to the company's primary operations.
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Which of the following items would not be included in income from continuing operations?
Which of the following items would not be included in income from continuing operations?
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Disposal of a business component would be included in discontinued operations, where as gain on retirement of bonds is a normal part of continuing operations.
Disposal of a business component would be included in discontinued operations, where as gain on retirement of bonds is a normal part of continuing operations.
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Camino Corporation reported the following items in Year 3: Foreign currency translation loss: $3,000; distributions to owners: $15,000; net income: $125,000; unamortized prior service cost on pension plan: $12,000; deferred gain on an effective cash flow hedge: $8,000. What amount should Camino report as other comprehensive income (loss) in Year 3?
Camino Corporation reported the following items in Year 3: Foreign currency translation loss: $3,000; distributions to owners: $15,000; net income: $125,000; unamortized prior service cost on pension plan: $12,000; deferred gain on an effective cash flow hedge: $8,000. What amount should Camino report as other comprehensive income (loss) in Year 3?
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Included in other comprehensive income are the $3K foreign currency translation loss, the $12K in prior service cost, and the $8K gain on cash flow hedge.
Included in other comprehensive income are the $3K foreign currency translation loss, the $12K in prior service cost, and the $8K gain on cash flow hedge.
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Which of the following is incorrect regarding the reporting of comprehensive income?
Which of the following is incorrect regarding the reporting of comprehensive income?
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Other comprehensive income includes several specific items that have not yet hit net income, while other comprehensive income includes these same items but begins with net income.
Other comprehensive income includes several specific items that have not yet hit net income, while other comprehensive income includes these same items but begins with net income.
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Which of the following items would not be included in other comprehensive income?
Which of the following items would not be included in other comprehensive income?
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Unrealized holding gains/losses are included in net income.
Unrealized holding gains/losses are included in net income.
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The Washington Company starts the year with $800,000 in assets and $300,000 in liabilities. During the year the company reported net income of $200,000 and paid dividends during the year of $40,000. No other equity transactions took place. What was the company's return on equity for the period?
The Washington Company starts the year with $800,000 in assets and $300,000 in liabilities. During the year the company reported net income of $200,000 and paid dividends during the year of $40,000. No other equity transactions took place. What was the company's return on equity for the period?
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Return on equity is calculated by dividing net income by average owner's equity. Beginning owner's equity is the difference between beginning assets and liabilities ($800K - $300K = $500K). Ending owner's equity is beginning equity of $500K + net income of $200K - dividends paid of $40K = $660K. This makes average equity $580K, and return on equity is $200K dividend by $580K.
Return on equity is calculated by dividing net income by average owner's equity. Beginning owner's equity is the difference between beginning assets and liabilities ($800K - $300K = $500K). Ending owner's equity is beginning equity of $500K + net income of $200K - dividends paid of $40K = $660K. This makes average equity $580K, and return on equity is $200K dividend by $580K.
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At the end of Year 1, the Walter Company reported net income of $630,000. The company paid cash dividends of $20,000 per quarter on its preferred stock. The company started the year with 80,000 shares of common stock outstanding and 50,000 shares of preferred stock outstanding. On April 1, the company issued an additional 16,000 shares of common stock and 8,000 shares of preferred stock. What should the company report as basic earnings per share?
At the end of Year 1, the Walter Company reported net income of $630,000. The company paid cash dividends of $20,000 per quarter on its preferred stock. The company started the year with 80,000 shares of common stock outstanding and 50,000 shares of preferred stock outstanding. On April 1, the company issued an additional 16,000 shares of common stock and 8,000 shares of preferred stock. What should the company report as basic earnings per share?
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Basic EPS is calculated as (net income - preferred dividends)/average common shares outstanding. $80K in preferred dividends were paid during the year ($20K x 4 quarters). Average common shares outstanding were 92K (80K beginning shares x 3/12 months plus 96K shares after the issuance x 9/12 months). Thus EPS is ($630K - $120K)/92K.
Basic EPS is calculated as (net income - preferred dividends)/average common shares outstanding. $80K in preferred dividends were paid during the year ($20K x 4 quarters). Average common shares outstanding were 92K (80K beginning shares x 3/12 months plus 96K shares after the issuance x 9/12 months). Thus EPS is ($630K - $120K)/92K.
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Working capital is defined as:
Working capital is defined as:
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Working capital represents net short term assets.
Working capital represents net short term assets.
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Of the following, which are elements of comprehensive income?
Of the following, which are elements of comprehensive income?
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Sales revenue is a part of comprehensive income, deferred revenue is a liability, distributions to owners are changes in equity, as well as investments by owners.
Sales revenue is a part of comprehensive income, deferred revenue is a liability, distributions to owners are changes in equity, as well as investments by owners.
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The metal division of a company generates an operating profit of $10,000 per month. On the final day of year 1, the company officials decide to sell the division which has a book value of $540,000. These officials believe they can sell the division for $570,000 but only after spending $70,000 needed to make the sale. The metal division meets the qualifications to be classified as an asset held for sale. In addition, the division qualifies as a discontinued operation. It is sold for the anticipated amount in February of year 2. Ignoring income taxes, what does the company report at the bottom of its year 1 income statement for the discontinued operation?
The metal division of a company generates an operating profit of $10,000 per month. On the final day of year 1, the company officials decide to sell the division which has a book value of $540,000. These officials believe they can sell the division for $570,000 but only after spending $70,000 needed to make the sale. The metal division meets the qualifications to be classified as an asset held for sale. In addition, the division qualifies as a discontinued operation. It is sold for the anticipated amount in February of year 2. Ignoring income taxes, what does the company report at the bottom of its year 1 income statement for the discontinued operation?
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The metal division generation $120K in operating profits throughout the year ($10K per month x 12 months). As part of the sale of the metal division, the company anticipates a loss of $40K ($570K sale price - $540K book value - $70K necessary expenses). Combined this creates a profit of $80K for the entire year.
The metal division generation $120K in operating profits throughout the year ($10K per month x 12 months). As part of the sale of the metal division, the company anticipates a loss of $40K ($570K sale price - $540K book value - $70K necessary expenses). Combined this creates a profit of $80K for the entire year.
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Peace Corp purchases marketable securities in Love Corp during Year 5. At the end of Year 5, the fair value of Love stock has dropped below its cost. Peace considered the decline in value to be temporary. The security is classified as available-for-sale. What should be the effect on Peace's financial statements at the end of Year 5?
Peace Corp purchases marketable securities in Love Corp during Year 5. At the end of Year 5, the fair value of Love stock has dropped below its cost. Peace considered the decline in value to be temporary. The security is classified as available-for-sale. What should be the effect on Peace's financial statements at the end of Year 5?
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Securities that are classified as available-for-sale recognize holding gains/losses in OCI. Therefore, to adjust the securities to market value, the investment asset is decreased and a loss is recognized in OCI.
Securities that are classified as available-for-sale recognize holding gains/losses in OCI. Therefore, to adjust the securities to market value, the investment asset is decreased and a loss is recognized in OCI.
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Of the following, which are listed on the Statement of Comprehensive Income?
Of the following, which are listed on the Statement of Comprehensive Income?
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Both of these items are listed and broken out on the Statement of Comprehensive Income. Net income are more regular and standard income items where as OCI items are less frequent and do not reflect normal operations.
Both of these items are listed and broken out on the Statement of Comprehensive Income. Net income are more regular and standard income items where as OCI items are less frequent and do not reflect normal operations.
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The Washington Company starts the year with $800,000 in assets and $300,000 in liabilities. During the year the company reported net income of $200,000 and paid dividends during the year of $40,000. No other equity transactions took place. What was the company's return on equity for the period?
The Washington Company starts the year with $800,000 in assets and $300,000 in liabilities. During the year the company reported net income of $200,000 and paid dividends during the year of $40,000. No other equity transactions took place. What was the company's return on equity for the period?
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Return on equity is calculated by dividing net income by average owner's equity. Beginning owner's equity is the difference between beginning assets and liabilities ($800K - $300K = $500K). Ending owner's equity is beginning equity of $500K + net income of $200K - dividends paid of $40K = $660K. This makes average equity $580K, and return on equity is $200K dividend by $580K.
Return on equity is calculated by dividing net income by average owner's equity. Beginning owner's equity is the difference between beginning assets and liabilities ($800K - $300K = $500K). Ending owner's equity is beginning equity of $500K + net income of $200K - dividends paid of $40K = $660K. This makes average equity $580K, and return on equity is $200K dividend by $580K.
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At the end of Year 1, the Walter Company reported net income of $630,000. The company paid cash dividends of $20,000 per quarter on its preferred stock. The company started the year with 80,000 shares of common stock outstanding and 50,000 shares of preferred stock outstanding. On April 1, the company issued an additional 16,000 shares of common stock and 8,000 shares of preferred stock. What should the company report as basic earnings per share?
At the end of Year 1, the Walter Company reported net income of $630,000. The company paid cash dividends of $20,000 per quarter on its preferred stock. The company started the year with 80,000 shares of common stock outstanding and 50,000 shares of preferred stock outstanding. On April 1, the company issued an additional 16,000 shares of common stock and 8,000 shares of preferred stock. What should the company report as basic earnings per share?
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Basic EPS is calculated as (net income - preferred dividends)/average common shares outstanding. $80K in preferred dividends were paid during the year ($20K x 4 quarters). Average common shares outstanding were 92K (80K beginning shares x 3/12 months plus 96K shares after the issuance x 9/12 months). Thus EPS is ($630K - $120K)/92K.
Basic EPS is calculated as (net income - preferred dividends)/average common shares outstanding. $80K in preferred dividends were paid during the year ($20K x 4 quarters). Average common shares outstanding were 92K (80K beginning shares x 3/12 months plus 96K shares after the issuance x 9/12 months). Thus EPS is ($630K - $120K)/92K.
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Working capital is defined as:
Working capital is defined as:
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Working capital represents net short term assets.
Working capital represents net short term assets.
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Of the following, which are elements of comprehensive income?
Of the following, which are elements of comprehensive income?
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Sales revenue is a part of comprehensive income, deferred revenue is a liability, distributions to owners are changes in equity, as well as investments by owners.
Sales revenue is a part of comprehensive income, deferred revenue is a liability, distributions to owners are changes in equity, as well as investments by owners.
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The metal division of a company generates an operating profit of $10,000 per month. On the final day of year 1, the company officials decide to sell the division which has a book value of $540,000. These officials believe they can sell the division for $570,000 but only after spending $70,000 needed to make the sale. The metal division meets the qualifications to be classified as an asset held for sale. In addition, the division qualifies as a discontinued operation. It is sold for the anticipated amount in February of year 2. Ignoring income taxes, what does the company report at the bottom of its year 1 income statement for the discontinued operation?
The metal division of a company generates an operating profit of $10,000 per month. On the final day of year 1, the company officials decide to sell the division which has a book value of $540,000. These officials believe they can sell the division for $570,000 but only after spending $70,000 needed to make the sale. The metal division meets the qualifications to be classified as an asset held for sale. In addition, the division qualifies as a discontinued operation. It is sold for the anticipated amount in February of year 2. Ignoring income taxes, what does the company report at the bottom of its year 1 income statement for the discontinued operation?
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The metal division generation $120K in operating profits throughout the year ($10K per month x 12 months). As part of the sale of the metal division, the company anticipates a loss of $40K ($570K sale price - $540K book value - $70K necessary expenses). Combined this creates a profit of $80K for the entire year.
The metal division generation $120K in operating profits throughout the year ($10K per month x 12 months). As part of the sale of the metal division, the company anticipates a loss of $40K ($570K sale price - $540K book value - $70K necessary expenses). Combined this creates a profit of $80K for the entire year.
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Barr Company had the following account balances at the end of Year 1: sales of $250,000; cost of goods sold of $90,000; salaries and wages of $30,000; rent expense of $15,000; advertising costs of $25,000; fixed assets purchased $50,000. What was Barr's net income for Year 1?
Barr Company had the following account balances at the end of Year 1: sales of $250,000; cost of goods sold of $90,000; salaries and wages of $30,000; rent expense of $15,000; advertising costs of $25,000; fixed assets purchased $50,000. What was Barr's net income for Year 1?
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Net income is calculated by taking sales of $250K - COGS of $90K - salaries of $30K - rent of $15K - advertising of $25K.
Net income is calculated by taking sales of $250K - COGS of $90K - salaries of $30K - rent of $15K - advertising of $25K.
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