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Popson inc incurred a material loss which was not unusual in

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1. Popson inc incurred a material loss which was not unusual in character, but was clearly an infrequent occurrence. The loss should be reported as:

a. an extraordinary loss
b. a separate line between income from continuing operations and income from discontinued operations
c. a separate line item within income from continuing operations
d. a separate line item in the retained earnings statement

2. A change in depreciation method is accounted for:

a. retrospectively
b. as a cumulative adjustment to income in the year of change
c. prospectively, like changes in accounting estimates
d. none of the above

3. Which of the following is not true about EPS?

a. it must be reported by all corporations whose stock is publicly traded
b. it must be reported separately for discontinued operations
c. it must be reported separately for extraordinary items
d. it must be reported on operating income

4. The FASB's stated preference for reporting operating cash flows is:

a. indirect method
b. direct method
c. working capital method
d. all financial resources method

5. Misty Company reported the following before-tax items during the current year:
Sales - $600
Operating Expenses - $250
Restructuring charges - $20
Extraordinary loss - $50
Misty's effective tax rate is 40%

What would be Misty's net income for the current year?

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Solution Preview

1. Popson inc incurred a material loss which was not unusual in character, but was clearly an infrequent occurrence. The loss should be reported as: A

a. an extraordinary loss
b. a separate line between income from continuing operations and income from discontinued operations
c. a separate line item within income from continuing operations
d. a ...

Solution Summary

Popson inc incurred a material loss which was not unusual in character, but was clearly an infrequent occurrence. The loss should be reported as:

a. an extraordinary loss
b. a separate line between income from continuing operations and income from discontinued operations
c. a separate line item within income from continuing operations
d. a separate line item in the retained earnings statement

2. A change in depreciation method is accounted for:

a. retrospectively
b. as a cumulative adjustment to income in the year of change
c. prospectively, like changes in accounting estimates
d. none of the above

3. Which of the following is not true about EPS?

a. it must be reported by all corporations whose stock is publicly traded
b. it must be reported separately for discontinued operations
c. it must be reported separately for extraordinary items
d. it must be reported on operating income

4. The FASB's stated preference for reporting operating cash flows is:

a. indirect method
b. direct method
c. working capital method
d. all financial resources method

5. Misty Company reported the following before-tax items during the current year:
Sales - $600
Operating Expenses - $250
Restructuring charges - $20
Extraordinary loss - $50
Misty's effective tax rate is 40%

What would be Misty's net income for the current year?

$2.19