Question Details

The order of presentation of nontypical items 



1. The discontinued operations section of the income statement refers to
a. discontinuance of a product line.
b. the income or loss on products that have been completed and sold.
c. obsolete equipment and discontinued inventory items.
d. the disposal of a significant segment of a business.
2. Which one of the following would be classified as an extraordinary item?
a. Expropriation of property by a foreign government
b. Losses attributed to a labor strike
c. Write-down of inventories
d. Gains or losses from sales of equipment
3. When a change in accounting principle occurs,
a. all prior years' financial statements should be changed to reflect the newly adopted
principle.
b. the new principle should be used in reporting the results of operations of the current
year.
c. the cumulative effect of the change in principle should be reflected on the income
statement as of the beginning of the next year.
d. the cumulative effect of the change in accounting principle should be classified as an
extraordinary item on the income statement.
4. If an item meets one (but not both) of the criteria for an extraordinary item, it
a. only needs to be disclosed in the footnotes of the financial statements.
b. may be treated as sales revenue (if it is a gain) and as an operating expense (if it is a
loss).
c. is reported as an "other revenue or gain" or "other expense and loss," net of tax.
d. is reported at its gross amount as an "other revenue or gain" or "other expense or
loss."
5. The order of presentation of nontypical items that may appear on the income statement is
a. Extraordinary items, Discontinued operations, Change in accounting principle.
b. Discontinued operations, Extraordinary items, Change in accounting principle.
c. Change in accounting principle, Discontinued operations, Extraordinary items.
d. Change in accounting principle, Extraordinary items, Discontinued operations.



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