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Jim's Jeans decided to shut down their Jimmy Jean Division. Where on the income statement would this closing be addressed? Mark one answer:

(A)Under extraordinary items at the bottom of the income statement.

(B)As a note on the operating income section of the income statement.

(C)Under discontinued operations at the bottom of the income statement.

(D)As a deduction in the Net Profit section of the income statement.

(E)An entry would be on the operating income section of the income statement.

The Correct Answer

King, CPA, was engaged to audit the financial statements of Newton Company after its fiscal year had ended. King neither observed the inventory count nor confirmed the receivables by direct communication with debtors, but was satisfied concerning both after applying alternative procedures.King’s auditor’s report most likely contained a(n)

(A)Qualified opinion (B)Disclaimer of opinion. (C)Unmodified opinion. (D)Unmodified opinion with an other-matter paragraph.

Correct Answer: C

If equipment is used by a corporation in its operations and is sold at a loss, under which section on the statement of cash flows is this reported? Mark one answer:

(A)Operating (B)Investing (C)Financing (D)Supplemental (E)It is not reported on the statement of cash flows.

Correct Answer: A

The purpose of the trial balance is to:

(A)Check the solvency of the company (B)Identify credits and debits (C)Analyze the accounting period (D)Verify that credits equal debits (E)Find misclassified transactions

Correct Answer: D

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