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

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Question 31

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In a recent press release,Estee Lauder Co.reported "a fiscal fourth-quarter loss due to a restructuring charge but said it expects to see earnings growth in its fiscal second through fourth quarters." The New York skin care and cosmetics company reported a net loss of $25.4 million,or 13 cents a share,for the quarter ended June 30,compared with net income of $20.4 million,or six cents a share,a year earlier.Excluding the restructuring charge of $76.9 million,or 32 cents a share,the company said profit would have been $51.5 million,or 19 cents a share.Discuss how Estee Lauder's press release relates to its earnings quality.

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Company management is pointing out that,...

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Question 32

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Tropical Tours reported revenue of $400,000 for its year ended December 31,2016.Accounts receivable at December 31,2015 and 2016,were $35,000 and $32,000,respectively.Using the direct method for reporting cash flows from operating activities,Tropical Tours would report cash collected from customers of:

A) $400,000.
B) $397,000.
C) $403,000.
D) $365,000.

E) All of the above
F) C) and D)

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Question 33

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Shady Lane's income tax payable account decreased from $14 million to $12 million during 2016.If its income tax expense was $80 million,what was shown as an operating cash flow under the direct method?

The division's book value and fair value less cost to sell on December 31 were $3,000,000 and $3,500,000,respectively.What before-tax amount(s) should Mercedes report as loss on discontinued operations in its 2016 income statement?

Cash flows from financing activities include:

Popson Inc.incurred a material loss that was unusual in character.This loss should be reported as:

Rowdy's would report net cash inflows (outflows) from operating activities in the amount of:

Use the following to answer questions The trial balance of Kroeger Inc.included the following accounts as of December 31,2016: Kroeger had 300,000 shares of stock outstanding throughout the year.Income tax expense has not yet been accrued.The effective tax rate is 40%. -Required: Prepare a 2016 multiple-step income statement for Kroeger Inc.with earnings per share disclosure.

The FASB's stated preference for reporting operating cash flows is the:

Canton Corporation reported the following items in its adjusted trial balance for the year ended December 31,2016: Canton is subject to a 30% tax rate. Required: Prepare the December 31,2016,income statement for Canton Corporation,starting with income from continuing operations before income taxes.

Bird Brain Co.reported net income of $45,000 for the year ended December 31,2016.January 1 balances in accounts receivable and accounts payable were $23,000 and $26,000 respectively.Year-end balances in these accounts were $22,000 and $28,000,respectively.Assuming that all relevant information has been presented,Bird Brain's cash flows from operating activities would be:

The Maytag Corporation's income statement includes income from continuing operations and a loss on discontinued operations.Earnings per share information would be provided for:

Change statements include a:

On November 1,2016,Jamison Inc.adopted a plan to discontinue its barge division,which qualifies as a separate component of the business according to GAAP regarding discontinued operations.The disposal of the division was expected to be concluded by April 30,2017.On December 31,2016,the company's year-end,the following information relative to the discontinued division was accumulated: In its income statement for the year ended December 31,2016,Jamison would report a before-tax loss on discontinued operations of:

Use the following to answer questions The trial balance of Kroeger Inc.included the following accounts as of December 31,2016: Kroeger had 300,000 shares of stock outstanding throughout the year.Income tax expense has not yet been accrued.The effective tax rate is 40%. -Required: Prepare a single-step income statement with earnings per share disclosure.

Comprehensive income reports an expanded version of income to include certain types of gains and losses not included in traditional income statements.

Use the following to answer questions The trial balance of Rollins Inc.included the following accounts as of December 31,2016: Rollins had 100,000 shares of stock outstanding throughout the year.Income tax expense has not yet been accrued.The effective tax rate is 40%. -Required: Prepare a 2016 multiple-step income statement for Rollins Inc.with earnings per share disclosure.

Listed below are 10 terms followed by a list of phrases that describe or characterize the terms.Match each phrase with the number for the correct term.

Explain,using an example,how a company can use earnings management and justify it by conservatism.

Which of the following is not true about EPS?