Homework answers / question archive / Rizal Technological University CBET 01-502A Chapter 6 1)It is the change in equity during a period resulting from transactions and other events, other that changes resulting from transactions with owners in their capacity as owners   Comprehensive income Other comprehensive income Profit or loss Retained earnings   It is the total of income less expenses, excluding the components of other comprehensive income   Comprehensive income Profit or loss Accounting income Economic income   This term comprises items of income and expense including reclassification adjustments that are not recognized in proft or loss as required or permitted by PFRS   Comprehensive income Other comprehensive income Profit or loss Retained earnings       The components of other comprehensive income include all of the following, except   Unrealized gain on derivative contract designated as cash flow hedge Loss from translating the financial statements of a foreign operation Actuarial gain on defined benefit plan Dividend paid to shareholders   Which of the following is not a component of other comprehensive income?   Foreign currency translation adjustment Unrealized gain and loss on financial asset held for trading Deferred loss on derivative financial instrument designated as cash flow hedge Change in revaluation surplus   Which of the following components of other comprehensive income shall be reclassified subsequently to profit or loss?   Change in revaluation surplus Remeasurement of defined benefit plan Gain or loss from equity investment measure at fair value through other comprehensive income The effective portion of gain and loss on hedging instrument in a cash flow hedge   The two-statement approach of presenting comprehensive income is preparing   A comparative statement of comprehensive income A combined statement of comprehensive income and retained earnings A combined income statement and a statement of changes in equity A separate income statement and a separate statement of comprehensive income   Total comprehensive income is presented   Showing separately the total amount attributable to owners of the parent and the noncotrolling interest Showing an analysis of expenses by function Showing an analysis of expenses by nature Showing profit or loss and the total of other comprehensive income   Which of the following terms cannot be used to describe a line item in the statement of comprehensive income?   Revenue Gross profit Profit before tax Extraordinary item   An entity shall present an analysis of expenses using a classification based on   The nature of expenses The function of expenses Either the nature of expenses or the function of expenses, whichever provides information that is reliable and more relevant Either the nature of expenses or the function of expenses, whichever the entity would prefer to present   Separate line items in an analysis of expenses by nature include   Purchases, transport costs, employee benefits, depreciation, extraordinary items Purchases, distribution expenses, administrative expenses, employee benefits, depreciation Depreciation, purchases, transport cost, employee benefits and advertising Cost of goods sold, administrative expenses, transport costs and distribution expenses     Separate line items in an analysis of expenses by function include   Purchases, transport costs, employee benefits, depreciation, extraordinary items Purchases, distribution expenses, administrative expenses, employee benefits, depreciation Depreciation, purchase, employee benefits and advertising Costs of goods sold, distribution expenses and administrative expenses   Conceptually, net income is a measure of   Wealth Change of wealth Capital maintenance Cash flow   Which of the following approaches to income measurement underlies financial reporting?   Transaction approach Economic approach Valuation approach Capital maintenance approach   The income statement reveals   Assets and equity at a point in time Assets and equity for a period of time Net income at a point of time Net income for a period of time   Which of the following is not a generally accepted method of presenting the income statement?   Including prior period errors in determining net income The condensed income statement The consolidated income statement Including gain and loss from disposal of asset in determining net income   Comprehensive income includes all of the following, except   Dividend revenue Loss on disposal of asset Investment by owners Unrealized holding gain   The income statement would help in which of the following?   Evaluate liquidity Evaluate solvency Estimate future cash flows Estimate future financial flexibility   Which is not a limitation of the income statement?   Items that cannot be measured reliably are not reported Only actual amounts are reported in determining income Income measurement involves judgment Income numbers are affected by the accounting method   The income statement provides information that helps predict   The amount of future cash flows The timing of future cash flows   The uncertainty of future cash flows All of these are provided by the income statement   Which of the following would represent the least likely use of an income statement?   Use by customers to determine ability to provide needed goods and services Use by labor unions to examine earnings closely as a basis for salary discussion Use by government agencies to formulate tax policy Use by investors interested in the financial position   Investors and creditors use an income statement for all of the following, except   To evaluate the future performance of the entity To provide a basis for predicting future performance To help assess the risk and uncertainty of achieving future cash flows To evaluate past performance of an entity   What is the purpose of reporting comprehensive income?   To report changes in equity due to transactions with owners To report a measure of overall entity performance To replace net income with a better measure To combine income from continuing operations with income from discontinued operations   The term “comprehensive income”   Must be reported on the face of the income statement Includes all changes in equity during a period except those resulting from investments by and distributions to owners Is the net change in owners’ equity for the period Is synonymous with the term “net income”   When a complete set of general-purpose financial statements is presented, comprehensive income and its components should   Appear as a part of discontinued operations Be reported net of related income tax effect, in total and individually Appear in a supplemental schedule in the notes to the financial statements Be displayed in a statement that has the same prominence as other financial statements     Which of the following is not an acceptable option of reporting components of other comprehensive income?   In a separate statement of comprehensive income In a single statement of comprehensive income In the notes In a statement of changes in equity   Why is reclassification adjustment used when reporting other comprehensive income?   To reclassify an item of comprehensive income as another item of comprehensive income To avoid double counting of items To make net income equal comprehensive income To adjust for the income tax effect of reporting other comprehensive income   Which of the following items would cause net income to differ from comprehensive income?   Unrealized loss on financial asset measured at fair value through other comprehensive income Unrealized loss on financial asset held for trading Loss on exchange of similar asset Loss on exchange of dissimilar asset   Other comprehensive income should be reported as component of   Retained earnings Share premium Both retained earnings and share premium Neither retained earnings nor share premium   Which of the following options for displaying other comprehensive income is preferred?   A continuation from net income in the income statement A separate statement that begins with net income In the statement of changes in equity A continuation from net income in the income statement or separate statement that begins with net income   Income determination is arrived at by   Measuring the change in equity Identifying the change in the purchasing power Using a transaction approach Applying the value added concept   Under a strict transaction approach to income measurement, which of the following would not be considered a transaction?   Sale of goods at certain markup Payment of salaries Adjustment of inventory at the lower of cost and net realizable value when net realizable value is below cost Exchange of inventory for an equipment   How should exchange gain or loss resulting from foreign currency transaction be accounted for?   Included as component of income from continuing operations for the period in which the rate changes Included as component of other comprehensive income for the period in which the rate changes Included in the statement of financial position Included in net income for gain but deferred for loss   A transaction that is unusual in nature and infrequent in occurrence should be presented as   Component of income from continuing operations, but not net of applicable income tax Component of income from continuing operations, net of applicable income tax Component of income from discontinued operation, net of applicable income tax Prior period error, net of applicable income tax  

Rizal Technological University CBET 01-502A Chapter 6 1)It is the change in equity during a period resulting from transactions and other events, other that changes resulting from transactions with owners in their capacity as owners   Comprehensive income Other comprehensive income Profit or loss Retained earnings   It is the total of income less expenses, excluding the components of other comprehensive income   Comprehensive income Profit or loss Accounting income Economic income   This term comprises items of income and expense including reclassification adjustments that are not recognized in proft or loss as required or permitted by PFRS   Comprehensive income Other comprehensive income Profit or loss Retained earnings       The components of other comprehensive income include all of the following, except   Unrealized gain on derivative contract designated as cash flow hedge Loss from translating the financial statements of a foreign operation Actuarial gain on defined benefit plan Dividend paid to shareholders   Which of the following is not a component of other comprehensive income?   Foreign currency translation adjustment Unrealized gain and loss on financial asset held for trading Deferred loss on derivative financial instrument designated as cash flow hedge Change in revaluation surplus   Which of the following components of other comprehensive income shall be reclassified subsequently to profit or loss?   Change in revaluation surplus Remeasurement of defined benefit plan Gain or loss from equity investment measure at fair value through other comprehensive income The effective portion of gain and loss on hedging instrument in a cash flow hedge   The two-statement approach of presenting comprehensive income is preparing   A comparative statement of comprehensive income A combined statement of comprehensive income and retained earnings A combined income statement and a statement of changes in equity A separate income statement and a separate statement of comprehensive income   Total comprehensive income is presented   Showing separately the total amount attributable to owners of the parent and the noncotrolling interest Showing an analysis of expenses by function Showing an analysis of expenses by nature Showing profit or loss and the total of other comprehensive income   Which of the following terms cannot be used to describe a line item in the statement of comprehensive income?   Revenue Gross profit Profit before tax Extraordinary item   An entity shall present an analysis of expenses using a classification based on   The nature of expenses The function of expenses Either the nature of expenses or the function of expenses, whichever provides information that is reliable and more relevant Either the nature of expenses or the function of expenses, whichever the entity would prefer to present   Separate line items in an analysis of expenses by nature include   Purchases, transport costs, employee benefits, depreciation, extraordinary items Purchases, distribution expenses, administrative expenses, employee benefits, depreciation Depreciation, purchases, transport cost, employee benefits and advertising Cost of goods sold, administrative expenses, transport costs and distribution expenses     Separate line items in an analysis of expenses by function include   Purchases, transport costs, employee benefits, depreciation, extraordinary items Purchases, distribution expenses, administrative expenses, employee benefits, depreciation Depreciation, purchase, employee benefits and advertising Costs of goods sold, distribution expenses and administrative expenses   Conceptually, net income is a measure of   Wealth Change of wealth Capital maintenance Cash flow   Which of the following approaches to income measurement underlies financial reporting?   Transaction approach Economic approach Valuation approach Capital maintenance approach   The income statement reveals   Assets and equity at a point in time Assets and equity for a period of time Net income at a point of time Net income for a period of time   Which of the following is not a generally accepted method of presenting the income statement?   Including prior period errors in determining net income The condensed income statement The consolidated income statement Including gain and loss from disposal of asset in determining net income   Comprehensive income includes all of the following, except   Dividend revenue Loss on disposal of asset Investment by owners Unrealized holding gain   The income statement would help in which of the following?   Evaluate liquidity Evaluate solvency Estimate future cash flows Estimate future financial flexibility   Which is not a limitation of the income statement?   Items that cannot be measured reliably are not reported Only actual amounts are reported in determining income Income measurement involves judgment Income numbers are affected by the accounting method   The income statement provides information that helps predict   The amount of future cash flows The timing of future cash flows   The uncertainty of future cash flows All of these are provided by the income statement   Which of the following would represent the least likely use of an income statement?   Use by customers to determine ability to provide needed goods and services Use by labor unions to examine earnings closely as a basis for salary discussion Use by government agencies to formulate tax policy Use by investors interested in the financial position   Investors and creditors use an income statement for all of the following, except   To evaluate the future performance of the entity To provide a basis for predicting future performance To help assess the risk and uncertainty of achieving future cash flows To evaluate past performance of an entity   What is the purpose of reporting comprehensive income?   To report changes in equity due to transactions with owners To report a measure of overall entity performance To replace net income with a better measure To combine income from continuing operations with income from discontinued operations   The term “comprehensive income”   Must be reported on the face of the income statement Includes all changes in equity during a period except those resulting from investments by and distributions to owners Is the net change in owners’ equity for the period Is synonymous with the term “net income”   When a complete set of general-purpose financial statements is presented, comprehensive income and its components should   Appear as a part of discontinued operations Be reported net of related income tax effect, in total and individually Appear in a supplemental schedule in the notes to the financial statements Be displayed in a statement that has the same prominence as other financial statements     Which of the following is not an acceptable option of reporting components of other comprehensive income?   In a separate statement of comprehensive income In a single statement of comprehensive income In the notes In a statement of changes in equity   Why is reclassification adjustment used when reporting other comprehensive income?   To reclassify an item of comprehensive income as another item of comprehensive income To avoid double counting of items To make net income equal comprehensive income To adjust for the income tax effect of reporting other comprehensive income   Which of the following items would cause net income to differ from comprehensive income?   Unrealized loss on financial asset measured at fair value through other comprehensive income Unrealized loss on financial asset held for trading Loss on exchange of similar asset Loss on exchange of dissimilar asset   Other comprehensive income should be reported as component of   Retained earnings Share premium Both retained earnings and share premium Neither retained earnings nor share premium   Which of the following options for displaying other comprehensive income is preferred?   A continuation from net income in the income statement A separate statement that begins with net income In the statement of changes in equity A continuation from net income in the income statement or separate statement that begins with net income   Income determination is arrived at by   Measuring the change in equity Identifying the change in the purchasing power Using a transaction approach Applying the value added concept   Under a strict transaction approach to income measurement, which of the following would not be considered a transaction?   Sale of goods at certain markup Payment of salaries Adjustment of inventory at the lower of cost and net realizable value when net realizable value is below cost Exchange of inventory for an equipment   How should exchange gain or loss resulting from foreign currency transaction be accounted for?   Included as component of income from continuing operations for the period in which the rate changes Included as component of other comprehensive income for the period in which the rate changes Included in the statement of financial position Included in net income for gain but deferred for loss   A transaction that is unusual in nature and infrequent in occurrence should be presented as   Component of income from continuing operations, but not net of applicable income tax Component of income from continuing operations, net of applicable income tax Component of income from discontinued operation, net of applicable income tax Prior period error, net of applicable income tax  

Accounting

Share With

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1. 3. The uncertainty of future cash flows
   4. All of these are provided by the income statement

 

21. Which of the following would represent the least likely use of an income statement?

 

1. 1. Use by customers to determine ability to provide needed goods and services
   2. Use by labor unions to examine earnings closely as a basis for salary discussion
   3. Use by government agencies to formulate tax policy
   4. Use by investors interested in the financial position

 

22. Investors and creditors use an income statement for all of the following, except

 

1. 1. To evaluate the future performance of the entity
   2. To provide a basis for predicting future performance
   3. To help assess the risk and uncertainty of achieving future cash flows
   4. To evaluate past performance of an entity

 

23. What is the purpose of reporting comprehensive income?

 

1. 1. To report changes in equity due to transactions with owners
   2. To report a measure of overall entity performance
   3. To replace net income with a better measure
   4. To combine income from continuing operations with income from discontinued operations

 

24. The term “comprehensive income”

 

1. 1. Must be reported on the face of the income statement
   2. Includes all changes in equity during a period except those resulting from investments by and distributions to owners
   3. Is the net change in owners’ equity for the period
   4. Is synonymous with the term “net income”

 

25. When a complete set of general-purpose financial statements is presented, comprehensive income and its components should

 

1. 1. Appear as a part of discontinued operations
   2. Be reported net of related income tax effect, in total and individually
   3. Appear in a supplemental schedule in the notes to the financial statements
   4. Be displayed in a statement that has the same prominence as other financial statements

 

 

26. Which of the following is not an acceptable option of reporting components of other comprehensive income?

 

1. 1. In a separate statement of comprehensive income
   2. In a single statement of comprehensive income
   3. In the notes
   4. In a statement of changes in equity

 

27. Why is reclassification adjustment used when reporting other comprehensive income?

 

1. 1. To reclassify an item of comprehensive income as another item of comprehensive income
   2. To avoid double counting of items
   3. To make net income equal comprehensive income
   4. To adjust for the income tax effect of reporting other comprehensive income

 

28. Which of the following items would cause net income to differ from comprehensive income?

 

1. 1. Unrealized loss on financial asset measured at fair value through other comprehensive income
   2. Unrealized loss on financial asset held for trading
   3. Loss on exchange of similar asset
   4. Loss on exchange of dissimilar asset

 

29. Other comprehensive income should be reported as component of

 

1. 1. Retained earnings
   2. Share premium
   3. Both retained earnings and share premium
   4. Neither retained earnings nor share premium

 

30. Which of the following options for displaying other comprehensive income is preferred?

 

1. 1. A continuation from net income in the income statement
   2. A separate statement that begins with net income
   3. In the statement of changes in equity
   4. A continuation from net income in the income statement or separate statement that begins with net income

 

31. Income determination is arrived at by

 

1. 1. Measuring the change in equity
   2. Identifying the change in the purchasing power
   3. Using a transaction approach
   4. Applying the value added concept

 

32. Under a strict transaction approach to income measurement, which of the following would not be considered a transaction?

 

1. 1. Sale of goods at certain markup
   2. Payment of salaries
   3. Adjustment of inventory at the lower of cost and net realizable value when net realizable value is below cost
   4. Exchange of inventory for an equipment

 

33. How should exchange gain or loss resulting from foreign currency transaction be accounted for?

 

1. 1. Included as component of income from continuing operations for the period in which the rate changes
   2. Included as component of other comprehensive income for the period in which the rate changes
   3. Included in the statement of financial position
   4. Included in net income for gain but deferred for loss

 

34. A transaction that is unusual in nature and infrequent in occurrence should be presented as

 

1. 1. Component of income from continuing operations, but not net of applicable income tax
   2. Component of income from continuing operations, net of applicable income tax
   3. Component of income from discontinued operation, net of applicable income tax
   4. Prior period error, net of applicable income tax