1. Which of the following is/are not true?

a.

Net income or profit for a period is the difference between revenues from selling goods and services and the expenses incurred to generate those revenues, plus some gains or losses of the period.

b.

If the expenses plus losses exceed the revenues plus gains, the result is a net loss.

c.

U.S. GAAP and IFRS require the accrual basis of accounting, which detaches the recognition of revenue from the receipt of cash.

d.

A seller recognizes revenues when it has performed all, or nearly all, of its obligations to the customer and when it has received cash or an asset that is convertible to cash.

e.

The firm recognizes and reports expenses that have a causal link with revenues, such as cost of sales, in the next accounting period.

1. Which of the following is/are correct?

a.

Discontinued operations are shown as the last category after income from continuing operations.

b.

The discontinued operations section of the income statement consists only of the gain or loss on disposal of the discontinued component net of the tax effect.

c.

The discontinued operations section of the income statement consists only of the income or loss from operating the discontinued component net of the tax effect.

d.

The discontinued operations section of the income statement consists of the income or loss from operating the discontinued component net of the tax effect as well as the gain or loss on disposal of the discontinued component net of the tax effect.

e.

None of these answer choices is correct.

1. The sum of net income and other comprehensive income is/are:

a.

Comprehensive Net Income

b.

Comprehensive Income

c.

Comprehensive Retained Earnings

d.

Net Income after comprehensive income items

e.

none of the above

1. Increased earnings

a.

are reflected as an increase in cash flow.

b.

do not always generate an increase in cash flow.

c.

result in a decrease in cash flow only if dividends are paid.

d.

are the starting point for the direct method cash flow statement.

e.

include none of the above.