Why are extraordinary items included on the income statement?
- It arises because certain revenue and expense items appear in the income statement either before or after they are included in the tax return. It is required for extraordinary items and discontinued operations but not for prior period adjustments. Its purpose is to allocate income tax expense evenly over a number of accounting periods.
What is the purpose of Intraperiod tax allocation?
The intraperiod tax allocation concept is used to reveal the “true” results of certain transactions net of all effects, rather than disaggregating them from income taxes.
What does tax allocation mean?
The allocation of a charge to tax between different sources of income.
Which of the following is a required disclosure in the income statement when reporting the disposal of a component of the business?
Which of the following is a required disclosure in the income statement when reporting the disposal of a component of the business? Earnings per share from continuing operations, discontinued operations, and net income should be disclosed on the face of the income statement.
What does the single step income statement emphasize?
The single-step income statement emphasizes a. the gross profit figure. extraordinary items and accounting changes more than these are emphasized in the multiple-step income statement.
When a company discontinues an operation and disposes of the discontinued?
When a company discontinues an operation and disposes of the discontinued operation (component), the transaction should be included in the income statement as a gain or loss on disposal reported as: 1. an amount after continuing operations.
Which of the following is a change in accounting principle?
The correct answer is D) a change from LIFO to FIFO. Change in the method of inventory costing is considered to be a change in accounting principle.
How do you allocate taxes?
Perform some simple calculations to help you prepare by setting aside money on a regular basis to pay your state income tax.
- Find your state’s tax rate on the type of business you own.
- Figure your net income.
- Multiply your state’s tax percentage times your net income.
- Divide your total state tax obligation by 12.
What does it mean to allocate income?
Allocation, in this case, means to assign income to the state you were living in when you earned it. Earned income comes from employment, such as wages, salaries, tips, payment for services, and commissions.
Which of the following is a required disclosure in the income statement when reporting the disposal of a component of the business discontinued operation )?
b. prior period adjustment. Which of the following is a required disclosure in the income statement when reporting the disposal of a component of the business? Earnings per share from continuing operations, discontinued operations, and net income should be disclosed on the face of the income statement.
Which one of the following is included in an income statement?
Once referred to as a profit-and-loss statement, an income statement typically includes revenue or sales, cost of goods sold, expenses, gross profits, taxes, net earnings and earnings before taxes. If you want a detailed analysis of your business’s performance, the income statement is the report you need.
Which of the following are the major elements of the income statement?
The income statement focuses on four key items— revenue, expenses, gains, and losses.
What are the advantages of a single step approach in preparing the statement of comprehensive income?
Single-Step Advantages For the preparer, it requires fewer details and fewer calculations. The preparer adds up all the revenues, adds up all the expenses and subtracts the total expenses from the total revenues to arrive at net income. For the user, only one level of income appears on the statement.
How does the single step form of income statement differ from the multiple step form?
A single-step income statement offers a simple report of a business’s profit, using a single equation to calculate net income. A multi-step income statement, on the other hand, separates operational revenues and expenses from non-operational ones and follows a three-step process to calculate net income.
What are the major advantages and disadvantages of the single step form of the income statement compared to the multiple step form?
Single-step statements are known to be concise and lacking details. A multi-step statement is more comprehensive. A single-step income statement treats the cost of goods sold as expenses. This is not the case in a multi-step income statement.