Statement of Comprehensive Income Paper 3

1

To comply with the matching principle, the cost of labor services of an employee who participates in the manufacturing of a product normally should be charged to the income statement in the period in which the






2

Which one of the following errors will result in the overstatement of net income?






3

The following information applies to the income statement of Addison Company:
Gross sales....................... $1,000,000
Net sales............................ 900,000
Freight-in ...........................10,000
Ending inventory .................200,000
Gross profit margin 40% Addison’s cost of goods available for sale is






4

Unrealized gains and losses on trading securities should be presented in the






5

On July 1, Year 1, Denver Corp. purchased 3,000 shares of Eagle Co.’s 10,000 outstanding shares of common stock for $20 per share but did not elect the fair value option. On December 15, Year 1, Eagle paid $40,000 in dividends to its common shareholders. Eagle’s net income for the year ended December 31, Year 1, was $120,000, earned evenly throughout the year. In its Year 1 income statement, what amount of income from this investment should Denver report?






6

Net losses on firm purchase commitments to acquire goods for inventory result from a contract price that exceeds the current market price. If a firm expects that losses will occur when the purchase occurs, expected losses, if material,






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