QUESTION: 1761

Under the indirect method, cash flow from operating activities is computed by adjusting net income for all of the following, except

noncash changes in fixed assets.
nonoperating items included in net income.
noncash revenues and expenses.
noncash changes in operating assets.
noncash changes in operating liabilities.

Answer(s): A

Explanation:

Only operating assets are considered, not fixed assets.

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QUESTION: 1762

Depreciation expense for fixed assets is recorded:

for each period the asset is in use
when the asset is sold
as a liability until the asset is sold
at the end of each fiscal period during the asset's useful life

Answer(s): D

Explanation:

Depreciation is the periodic allocation of the cost of a tangible, long-term asset over its estimated useful life, and therefore a period expense. This expense is recorded at the end of each fiscal period until the asset is fully depreciated or disposed of.

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QUESTION: 1763

Which of the following is true with respect to extraordinary items?

Extraordinary items are recorded net of tax in income statement.
II. Extraordinary items, by definition, are probable and unusual in nature.
III. By definition, gains and losses from strikes are always extraordinary.
IV By definition, gains and losses from sale of plant property and equipment are never extraordinary.
I and IV
I, III and IV
II and IV
I, II and III

Answer(s): A

Explanation:

Extraordinary items are infrequent and unusual in nature. Strikes are not considered extraordinary.

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QUESTION: 1764

The Statement of Stockholders' Equity does not report

any minimum pension liability.
the investment of the owners in the firm.
the various accounting adjustments that reflect selected market value changes in noncurrent assets.
any cumulative impact on prior period earnings.
the effect of exchange rate changes on certain foreign subsidiaries.

Answer(s): D

Explanation:

Any cumulative impact on prior period earnings is reported net of tax after extraordinary items and discontinued operations on the income statement.

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QUESTION: 1761

Explanation:

QUESTION: 1762

Explanation:

QUESTION: 1763

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QUESTION: 1764

Explanation: