The operating results of a disposed segment along with any gain or loss on the disposal are disclosed in a separate category on the income statement.

True

False

2.Comprehensive income is equal to income from continuing operations plus/minus discontinued operations.

	True
	False

3.Information should be useful in assessing enterprise resources, claims to resources, and changes therein.

	True
	False

4. The price/earnings ratio goes down as the price of a company's stock rises.

	True
	False

5. Errors affecting the net income of previous periods are corrected by the use of prior period appropriations.

	True
	False

6. In an effort to concentrate its resources in more profitable areas, Southern Steel Corporation recently sold its family pizza restaurant segment. The disposal constitutes:

	C. a discontinued operation which should be disclosed net-of-tax effects.
	B. a discontinued operation which should be treated as a prior period adjustment.
	A. an item of other comprehensive income.
	E. None of these.
	D. a portion of income from continuing operations.

7. In reporting discontinued operations:

	C. tax effects should be ignored.
	D. both A and B.
	E. None of these.
	B. net income should exclude the effects of the discontinued operations.
	A. operating results and the gain/loss on disposal can be segregated.

8. A change in accounting principle:

	E. None of these.
	C. is shown as a cumulative catch-up adjustment in current period's income.
	B. should be made when the new procedure will result in improved financial income.
	D. All of the above.
	A. may occur frequently to utilize favorable alternative reporting procedures.

9. Which formula "calculates" the return on assets ratio?

	B. (Net Income + OCI)/Average Assets
	C. (Net Income + Discontinued Operations)/Average Assets
	E. None of these.
	D. (Net Income + Income Tax Expense)/Average Assets.
	A. (Net Income + Interest Expense)/Average Assets.

10. Chandler had 7,500 shares of common stock outstanding on January 1, and issued an additional 2,500 shares on June 1. There was no preferred stock, and net income was $124,700. How much is earnings per share (to the nearest cent) for the calendar year?

	D. $16.62
	B. $13.92
	A. $12.47
	E. None of these.

11. River Bend started the calendar year with 100,000 shares outstanding. An additional 20,000 shares were issued on April 1, and 10,000 shares were reacquired on July 1. What is the number of weighted-average shares outstanding for the full year?

	C. 120,000
	E. None of these.
	D. 130,000
	A. 100,000

12. Which of the following is not a stated objective of financial reporting?

	C. To provide information useful in preparing tax returns reports.
	B. To provide information useful in assessing claims against resources.
	A. To provide information useful in investment and credit decisions.
	E. None of these.
	D. To provide information about enterprise resources.

13. Relevant information is said to:

	C. Frequently possess predictive power
	D. Frequently possess feedback powe
	E. All of these.
	A. Bear on the decision-making process
	B. Be timely

14. To which organization has Congress given the power to set accounting principles for public companies?

	A. Internal Revenue Service
	E. None of these.
	B. Financial Accounting Standards Board
	C. Securities and Exchange Commission
	D. American Accounting Association

15. Wilbur desired to borrow money to expand his business. In his loan application he included financial statements that combined his personal assets with the assets and liabilities of the business. This violates which of the following assumptions?

	B. Periodicity assumption
	D. Going concern assumption
	C. Monetary unit assumption
	E. None of these.
	No answer text provided.
	A. Entity assumption