Question

H K N O G D С E 1. Match the appropriate treatment in the financial statements with each of the following items 1-6. 3 a Operating Income 4 b. Other Revenues & Gains S cOther Expenses & Losses 6 d. Discontinued Operations 7. Adjustment to beginning Retained Earnings for correction of an error 1. Gain on sale of investment securities. 19 20 21 22 23 24 2. Aprofit sharing bonus to employees computed as a percentage of net income 3. Additional depreciation on factory machinery because of an error in computing depreciation for the previous year, 4. Rent received from subletting a portion of the office space 5. A patent infringement soit, brought 2 years ago against the company by another company, was settled this year by a cash payment of $725,000 6. A reduction in the Allowance for Doubtful Accounts balance because the account appears to be considerably in excess of the probable loss from uncollectible receivables. 11

Answer 1

Answer is as follows:

1. b. Other Revenues and Gains

2. c. Other Expenses and Losses

3. e. Adjustment to beginning Retained Earnings for correction of an error

4. a. Operating Income

5. c. Other Expenses and Losses

6. e. Adjustment to beginning Retained Earnings for correction of an error