Reference no: EM132940625
Problem 1: Under the general rule of revenue recognition, revenue is recognized when
Group of answer choices
Option 1: all related expenses have been incurred.
Option 2: the earnings process is complete, and a valid promise of payment has been received.
Option 3: marketability and market price are assured.
Option 4: a contractual agreement exists, and cash collection is assured.
Problem 2: Which of the following would NOT be reflected in the income statement?
Group of answer choices
Option 1: Correction of an error in previously issued financial statements
Option 2: Loss on disposal of a segment of a business
Option 3: An extraordinary item
Option 4: Cumulative effect of a change in depreciation methods
Problem 3: All of the following components are shown in the income statement net of applicable income taxes EXCEPT
Group of answer choices
Option 1: gain or loss on sale of plant assets.
Option 2: discontinued operations.
Option 3: cumulative effect of a change in accounting principle.
Option 4: extraordinary gain or loss.