Reference no: EM131798565

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