The income statement reveals
a. resources and equities of a firm at a point in time.
b. resources and equities of a firm for a period of time.
c. net earnings (net income) of a firm at a point in time.
d. net earnings (net income) of a firm for a period of time.
Which of the following is true of accounting for changes in estimates?
a. A company recognizes a change in estimate by making a retrospective adjustment to the financial statements.
b. A company accounts for changes in estimates only in the period of change, even though it affects the future periods.
c. Changes in estimates are not carried back to adjust prior years.
d. Changes in estimates are considered as errors.
For Mortenson Company, the following information is available
Cost of goods sold $390,000
Dividend revenue 15,000
Income tax expense 36,000
Operating expenses 138,000
Sales revenue 600,000
In Mortenson's multiple-step income statement, gross profit
a. should not be reported
b. should be reported at $51,000.
c. should be reported at $210,000.
d. should be reported at $225,000.
Which of the following should be reported as a prior period adjustment?
Change in Estimated Lives Mistakes in the Application of
of Depreciable Assets Accounting Principles
a. Yes Yes
b. No Yes
c. Yes No
d. No No
True/False: Other Revenues/Gains are part of the operating section of a multi-step income statement