Question Details

Extraordinary item on the income statement



1.	If the disposal of a segment meets the criteria of a disposal of a segment, then:
a.	the loss on disposal is an extraordinary item
b.	the loss on disposal is categorized as "other expense"
c.	the results of operations of the segment will be reported in conjunction with the gain or loss on disposal
d.	the disposal qualifies as a change in entity, and prior years' statements presented on comparative purposes must be restated
e.	the effects of the disposal are shown as part of operations

	

	2.	Which of the following would be classified as an extraordinary item on the income statement?
a.	loss from a strike
b.	correction of an error related to a prior period
c.	write-off of obsolete inventory
d.	loss on disposal of a segment of business
e.	loss from prohibition of a product



3.	If a firm consolidates subsidiaries that are not wholly owned, an income statement item is created that is termed:
a.	dividend income
b.	minority share of earnings
c.	equity income
d.	extraordinary
e.	gain from sale of subsidiary



	4.	Which of the following will not affect retained earnings?
a.	declaration of a stock dividend
b.	payment of a cash dividend previously disclosed
c.	adjustment for an error of a prior period
d.	net income
e.	net loss



	5.	Anchor Company has 1,000,000 shares of common stock with a par value of $5. Additional paid-in capital totals $5,000,000 and retained earnings is $8,000,000. The directors declare a 10% stock dividend when the market value is $15. The reduction of retained earnings as a result of the declaration will be:
a.	$0
b.	$500,000
c.	$800,000
d.	$1,000,000
e.	$1,500,000




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