161. Corporate annual reports typically do not contain which of the following?
A. management discussion and analysis
B. SEC statement expressing an opinion
C. accompanying foot notes
D. auditor's report
162. The independent auditor's report does which of the following?
A. describes which financial statements are covered by the audit
B. gives the auditor's opinion regarding the fairness of the financial statements
C. summarizes what the auditor did
D. states that the financial statements are truthful
163. The purpose of an audit is to
A. determine whether or not a company is a good investment.
B. render an opinion on the fairness of the statements.
C. determine whether or not a company complies with income tax regulations.
D. determine whether or not a company is a good credit risk.
164. Which of the following is required by the Sarbanes-Oxley Act of 2002?
A. A price-earnings ratio.
B. A report on internal control.
C. A vertical analysis.
D. A common-sized statement.
165. All of the following are typically included in the Management’s Discussion and Analysis in annual reports except:
A. explanations of any significant changes between the current and prior years’ financial statements.
B. management’s assessment of liquidity.
C. journal entries.
D. off-balance-sheet arrangements
166. Which of the following should be reported net of the related income tax effect on the income statement?
A. Sale of an inventory item at a loss
B. Loss due to theft
C. Loss due to a discontinued operations of the business
D. Sale of a temporary investment at a loss
167. Which of the following would appear as an extraordinary item on the income statement?
A. loss resulting from the sale of fixed assets
B. gain resulting from the disposal of a segment of the business
C. loss from land condemned for public use
D. liquidating dividend
168. A loss on disposal of a segment would be reported in the income statement as a(n)
A. administrative expense
B. other expense
C. deduction from income from continuing operations
D. selling expense
169. An extraordinary item results from
A. a segment of the business being sold
B. corporate income tax being paid
C. a change from one accounting method to another acceptable accounting method
D. a transaction or event that is unusual and occurs infrequently.
170. Which of the following is considered an unusual item affecting the prior period’s income statement?
A. Fixed asset impairments
B. Errors
C. Extraordinary item
D. Discontinued operations