TEST 2 WILEYPLUS QUESTIONS
CHAPTERS 4 AND 5 QUESTIONS AND
ANSWERS WITH VERIFIED SOLUTIONS
100% CORRECT RATED A+
The Major Elements of the Income Statement are: - ANSWER✔✔ Revenues,
Expenses, Gains, and Losses
Which of the following is false about an Income Statement?
A) Income Measurement involves Judgement
B) Items that cannot be Measured Reliably are not Reported in the Income
Statement
C) Income Numbers are affected by the Accounting Methods Employed
D) It is used to Measure the Solvency of a Company
E) All of the Above
F) None of the Above - ANSWER✔✔ ??
The Income Statement Reveals? - ANSWER✔✔ Net Earnings (Net Income) of a
Firm at a Period in Time
Which of the Following is an example of Managing Earnings Down?
,A) Reducing Research and Development Expenditures
B) Changing Estimated Bad Debts from 3% to 2.5% of sales
C) Revising the Estimated Life of Equipment from 10 years to 8 years
D) Not Writing off Obsolete Inventory
E) All of the Above
F) None of the Above - ANSWER✔✔ C) Revising the Estimated Life of
Equipment from 10 years to 8 years
Which of the Following is an example of Managing Earnings Up?
A) Decreasing Estimated Salvage Value of Equipment
B) Writing off Obsolete Inventory
C) Underestimating Warranty Claims
D) Accruing a Contingent Liability for an Ongoing Lawsuit
E) All of the Above
,F) None of the Above - ANSWER✔✔ C) Underestimating Warranty Claims
What might a Manager do during the Last Quarter of a Fiscal Year if she wanted to
Decrease Current Annual Net Income? - ANSWER✔✔ Delay Shipments and Sales
to Customers until after the End of the Fiscal Year
Which of the Following is an Advantage of the Single-Step Income Statement over
the Multiple-Step Income Statement
A) It Matches Costs and Expenses with Related Revenues
B) Expenses are Classified by Function
C) It does not Imply that one type of Revenue or Expense has Priority over
Another
D) It Reports Gross Profits for the year
E) All of the Above
F) None of the Above - ANSWER✔✔ It does not Imply that one type of Revenue
or Expense has Priority over another
The Single-Step Income Statement Emphasizes - ANSWER✔✔ Total Revenues
and Total Expenses
, The Occurrence which most likely would have no Effect on 2017 Net Income
(Assuming that all amounts involved are material) is the:
A) Sale in 2017 of an Office Building Contributed by a Stockholder in 1986
B) Collection in 2017 of a Receivable from a customer whose Account was written
off in 2016 by a charge to the Allowance Account
C) Settlement based on Litigation in 2017 of Previously Unrecognized Damages
from a Serious Accident that Occurred in 2015
D) Worthlessness Determined in 2017 of Stock Purchased on a Speculative Basis
in 2013
E) All of the Above
F) None of the Above - ANSWER✔✔ B) Collection in 2017 of a Receivable from
a customer whose Account was written off in 2016 by a charge to the Allowance
Account
The Occurrence that most likely would have no Effect on 2017 Net Income is the
A) Stock Purchased in 1999 Deemed Worthless in 2017
B) Correction of an Error in the Financial Statements of a Prior Period Discovered
Subsequent to their Issuance
C) Sale in 2017 of an Office Building Contributed by a Stockholder in 1964
CHAPTERS 4 AND 5 QUESTIONS AND
ANSWERS WITH VERIFIED SOLUTIONS
100% CORRECT RATED A+
The Major Elements of the Income Statement are: - ANSWER✔✔ Revenues,
Expenses, Gains, and Losses
Which of the following is false about an Income Statement?
A) Income Measurement involves Judgement
B) Items that cannot be Measured Reliably are not Reported in the Income
Statement
C) Income Numbers are affected by the Accounting Methods Employed
D) It is used to Measure the Solvency of a Company
E) All of the Above
F) None of the Above - ANSWER✔✔ ??
The Income Statement Reveals? - ANSWER✔✔ Net Earnings (Net Income) of a
Firm at a Period in Time
Which of the Following is an example of Managing Earnings Down?
,A) Reducing Research and Development Expenditures
B) Changing Estimated Bad Debts from 3% to 2.5% of sales
C) Revising the Estimated Life of Equipment from 10 years to 8 years
D) Not Writing off Obsolete Inventory
E) All of the Above
F) None of the Above - ANSWER✔✔ C) Revising the Estimated Life of
Equipment from 10 years to 8 years
Which of the Following is an example of Managing Earnings Up?
A) Decreasing Estimated Salvage Value of Equipment
B) Writing off Obsolete Inventory
C) Underestimating Warranty Claims
D) Accruing a Contingent Liability for an Ongoing Lawsuit
E) All of the Above
,F) None of the Above - ANSWER✔✔ C) Underestimating Warranty Claims
What might a Manager do during the Last Quarter of a Fiscal Year if she wanted to
Decrease Current Annual Net Income? - ANSWER✔✔ Delay Shipments and Sales
to Customers until after the End of the Fiscal Year
Which of the Following is an Advantage of the Single-Step Income Statement over
the Multiple-Step Income Statement
A) It Matches Costs and Expenses with Related Revenues
B) Expenses are Classified by Function
C) It does not Imply that one type of Revenue or Expense has Priority over
Another
D) It Reports Gross Profits for the year
E) All of the Above
F) None of the Above - ANSWER✔✔ It does not Imply that one type of Revenue
or Expense has Priority over another
The Single-Step Income Statement Emphasizes - ANSWER✔✔ Total Revenues
and Total Expenses
, The Occurrence which most likely would have no Effect on 2017 Net Income
(Assuming that all amounts involved are material) is the:
A) Sale in 2017 of an Office Building Contributed by a Stockholder in 1986
B) Collection in 2017 of a Receivable from a customer whose Account was written
off in 2016 by a charge to the Allowance Account
C) Settlement based on Litigation in 2017 of Previously Unrecognized Damages
from a Serious Accident that Occurred in 2015
D) Worthlessness Determined in 2017 of Stock Purchased on a Speculative Basis
in 2013
E) All of the Above
F) None of the Above - ANSWER✔✔ B) Collection in 2017 of a Receivable from
a customer whose Account was written off in 2016 by a charge to the Allowance
Account
The Occurrence that most likely would have no Effect on 2017 Net Income is the
A) Stock Purchased in 1999 Deemed Worthless in 2017
B) Correction of an Error in the Financial Statements of a Prior Period Discovered
Subsequent to their Issuance
C) Sale in 2017 of an Office Building Contributed by a Stockholder in 1964
