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Exam 4: The Income Statement, Comprehensive Income, and the Statement of Cash Flows

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Question 21

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Material errors in prior periods' income statements are corrected by making an adjustment to the beginning balance of the current period's retained earnings.

A) True
B) False

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Question 22

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The statement of cash flows for the year ended December 31, 2018, for Whiteside Incorporated is presented below. Required: Prepare the statement of cash flows assuming that Whiteside prepares its financial statements according to International Financial Reporting Standards (IFRS). Where IFRS allows flexibility, use the classification used most often in IFRS financial statements.

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Whiteside Incorporated
Statement of Cash...

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Question 23

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The statement of cash flows reports cash flows from the activities of:

Nevada Boot Co. reported net income of $216,000 for its year ended December 31, 2018. Purchases totaled $152,000. Accounts payable balances at the beginning and end of the year were $36,000 and $33,000, respectively. Beginning and ending inventory balances were $44,000 and $46,000, respectively. Assuming that all relevant information has been presented, Nevada Boot would report operating cash flows of:

Interest expense typically is considered a temporary component of earnings.

Temporary earnings are best characterized as:

During its 2018 fiscal year, Jacobsen Corporation reported before-tax income of $620,000. This amount does not include the following two items, both of which are considered to be material in amount: The company's income tax rate is 40%. Jacobsen Corporation prepares its financial statements applying U.S. GAAP. In its 2018 income statement, Jacobsen would report income from continuing operations of:

During its 2018 fiscal year, Jacobsen Corporation reported before-tax income of $620,000. This amount does not include the following two items, both of which are considered to be material in amount: The company's income tax rate is 40%. Jacobsen Corporation prepares its financial statement applying International Financial Reporting Standards (IFRS) . In its 2018 income statement, Jacobsen would report income from continuing operations of:

The following information (in $ millions) comes from the Annual Report of Saratoga Springs Co. for the year ending 12/31/2018: Required: Compute the following amounts for Saratoga Springs Co. -Its asset turnover ratio for 2018. Round your answer to two decimal places.

Briefly explain when and why intraperiod tax allocation is necessary.

A company could improve its return on assets by increasing its income or by increasing its total assets.

Missoula Inc. reported the following selected financial statement data: -Required: Compute the return on shareholders' equity for 2018. Round your answer to one decimal place, e.g., .1234 as 12.3%.

Freda's Florist reported the following before-tax income statement items for the year ended December 31, 2018: All income statement items are subject to a 40% income tax rate. In its 2018 income statement, Freda's separately stated income tax expense and total income tax expense would be:

Gains, but not losses, from discontinued operations must be separately reported in an income statement.

Restructuring costs typically can be defined as:

International Financial Reporting Standards (IFRS) require a company to classify expenses in an income statement by function.

Briefly explain why the income statement is referred to as a change statement.

Cash flows from investing do not include cash flows from:

A company reports the following amounts at the end of the current year: Under normal circumstances (ignoring tax effects) , permanent earnings would be computed as:

Intraperiod income tax presentation is primarily a matter of: