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Which of the following would not be considered an example of

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Which of the following would not be considered an example of a discontinued operation?

a. Disposal of part of a line of business.
b. Shifting production processes within an operation.
c. Elimination of a major class of customers.

Sweet Candy Company sold its lollipop division resulting in a loss of $30,000. Assuming a tax rate of 25%, the loss on this disposal will be reported on the income statement at what amount?


Gregor Company reported income before taxes of $600,000 and an extraordinary loss of $150,000. Assume that the company's tax rate is 30%. What amounts will be reported on the income statement for income before irregular items and extraordinary items, respectively?

a. $495,000 and $105,000.
b. $420,000 and $105,000.
c. $420,000 and $150,000.
d. $495,000 and $150,000.

Betty's Bunny Barn has experienced a $40,000 loss due to tornado damage to their inventory. Tornados have never before occurred in this area. Assuming that the company's tax rate is 30%, what amount will be reported for this loss on the income statement?

a. $28,000.
b. $40,000.
c. $36,000.

Jennifer's Noel Shoppe had severe damage done to its Christmas inventory due to an escaped circus elephant rampaging through the store. The inventory loss was $80,000 before applicable taxes of $20,000. Jennifer's Noel Shoppe should record the loss as a(n)

a.$80,000 extraordinary loss.
b.$60,000 extraordinary loss.
c.$80,000 loss in other expenses and losses.

Which of the following statements is true with respect to financial statement reporting for all cases when a company changes from one acceptable accounting method to another?

a. Comparability across periods is impaired.
b. Changes in both depreciation methods and inventory methods are reported retroactively.
c. Only a footnote is required to report the change.
d. Management must indicate that the accounting method change is preferable to the old method.

Which of the following items should be classified as an extraordinary item on an income statement?

a.Excess of the selling price over the cost of treasury stock.
b.Loss due to discontinued operations.
c.Gain on the sale of property, plant or equipment.
d.Loss due to expropriation of property by a foreign government.

Which of the following items appears on the income statement before income before irregular items?

a.Income tax expense.
b.Extraordinary items.
c.Discontinued operations.
d.Other comprehensive income.

The order of presentation of items that may appear on the income statement is

a.Discontinued operations, Extraordinary items, Income before income taxes.
b.Income before income taxes, Discontinued operations, Extraordinary items.
c.Extraordinary items, Discontinued operations, Income before income taxes.
d.Income before income taxes, Extraordinary items, Discontinued operations.

If an item meets one (but not both) of the criteria for an extraordinary item, it

a. is reported as an "other revenue or gain" or "other expense and loss," net of tax.
b. is reported at its gross amount as an "other revenue or gain" or "other expense or loss."
c. may be treated as sales revenue (if it is a gain) and as an operating expense (if it is a loss).
d. only needs to be disclosed in the footnotes of the financial statements.

When a change in depreciation method occurs:

a.the cumulative effect of the change should be reflected on the income statement as of the beginning of the next year.
b.the change should be reported in current and future years.
c.the cumulative effect of the change in accounting principle should be classified as an extraordinary item on the income statement.
d.prior years' financial statements should be changed to reflect the newly adopted method.

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