11.        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



12.        Watts 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.


13.        A company is not required to report a per share amount on the face of the income statement for which of the following items?
A)        Net income
B)        Prior period adjustment
C)        Extraordinary item
D)        Discontinued operations


14.        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.


15.        Ortiz Co. had the following account balances:
        Sales revenue        $  170,000
        Cost of goods sold        90,000
        Salaries and wages expense        15,000
        Depreciation expense        30,000
        Dividend revenue        6,000
        Utilities expense        12,000
        Rent revenue        30,000
        Interest expense        18,000
        Sales returns and allow.        14,500
        Advertising expense        14,500

What would Ortiz report as total revenues in a single-step income statement?
A)        $191,500
B)        $12,000
C)        $206,000
D)        $170,000


16.        Arreaga Corp. has a tax rate of 40 percent and income before non-operating items of $464,000. It also has the following items (gross amounts).
Unusual loss        $  74,000
Extraordinary loss        202,000
Gain on disposal of equipment        16,000
Change in accounting principle        
    increasing prior year's income        106,000

What is the amount of income tax expense Arreaga would report on its income statement?
A)        $185,600
B)        $162,400
C)        $198,400
D)        $124,000


17.        In 2012, Esther Corporation reported net income of $600,000. It declared and paid preferred stock dividends of $150,000 and common stock dividends of $60,000. During 2012, Esther had a weighted average of 200,000 common shares outstanding. Compute Esther's 2012 earnings per share.
A)        $1.95
B)        $2.25
C)        $3.00
D)        $3.75


18.        Moorman Corporation reports the following information:
Correction of understatement of depreciation        
        expense in prior years, net of tax        $   645,000
Dividends declared        480,000
Net income        1,500,000
Retained earnings, 1/1/12, as reported        3,000,000

Moorman should report retained earnings, 1/1/12, as adjusted at
A)        $2,355,000.
B)        $3,000,000.
C)        $3,645,000.
D)        $4,665,000.


19.        IFRS does not allow gains or losses to be classified as extraordinary items.
A)        True
B)        False


20.        The future value of an ordinary annuity table is used when payments are invested at the beginning of each period.
A)        True
B)        False