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     41.     Which of the following is a required disclosure in the income statement when reporting the disposal of a component of the business?
a.     The gain or loss on disposal should be reported as an extraordinary item.
b.     Results of operations of a discontinued component should be disclosed immediately below extraordinary items.
c. Earnings per share from both continuing operations and net income should be disclosed on the face of the income statement.
d. The gain or loss on disposal should not be segregated, but should be reported together with the results of continuing operations.

     42.     When a company discontinues an operation and disposes of the discontinued operation (component), the transaction should be included in the income statement as a gain or loss on disposal reported as
a.     a prior period adjustment.
b.     an extraordinary item.
c.     an amount after continuing operations and before extraordinary items.
d.     a bulk sale of plant assets included in income from continuing operations.

     43.     Income taxes are allocated to
a.     extraordinary items.
b.     discontinued operations.
c.     prior period adjustments.
d.     all of these.

     44.     Which of the following is true about intraperiod tax allocation?
a.     It arises because certain revenue and expense items appear in the income statement either before or after they are included in the tax return.
b.     It is required for extraordinary items and cumulative effect of accounting changes but not for prior period adjustments.
c.     Its purpose is to allocate income tax expense evenly over a number of accounting periods.
d.     Its purpose is to relate the income tax expense to the items which affect the amount of tax.


     S45.     A material item which is unusual in nature or infrequent in occurrence, but not both should be shown in the income statement
     Net of Tax     Disclosed Separately
a.     No     No
b.     Yes     Yes
c.     No     Yes
d.     Yes     No

     S46.     Earnings per share should always be shown separately for
a.     net income and gross margin.
b.     net income and pretax income.
c.     income before extraordinary items.
d.     extraordinary items and prior period adjustments.

     P47.     A correction of an error in prior periods' income will be reported
     In the income statement     Net of tax
a.     Yes     Yes
b.     No     No
c.     Yes     No
d.     No     Yes

     48.     Which of the following items will not appear in the retained earnings statement?
a.     Net loss
b.     Prior period adjustment
c.     Discontinued operations
d.     Dividends

     49.     Which one of the following types of losses is excluded from the determination of net income in income statements?
a.     Material losses resulting from transactions in the company's investments account.
b.     Material losses resulting from unusual sales of assets not acquired for resale.
c.     Material losses resulting from the write-off of intangibles.
d.     Material losses resulting from correction of errors related to prior periods.

     50.     Shank Corporation made a very large arithmetical error in the preparation of its year-end financial statements by improper placement of a decimal point in the calculation of depreciation. The error caused the net income to be reported at almost double the proper amount. Correction of the error when discovered in the next year should be treated as
a.     an increase in depreciation expense for the year in which the error is discovered.
b.     a component of income for the year in which the error is discovered, but separately listed on the income statement and fully explained in a note to the financial statements.
c.     an extraordinary item for the year in which the error was made.
d.     a prior period adjustment.

     51.     Comprehensive income includes all of the following except
a.     dividend revenue.
b.     losses on disposal of assets.
c.     investments by owners.
d.     unrealized holding gains.

     52.     The approach most companies use to provide information related to the components of other comprehensive income is a
a.     second separate income statement.
b.     combined income statement of comprehensive income.
c.     separate column in the statement of changes in stockholders’ equity.
d.     footnote disclosure.

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