5-1 CHAPTER 5 THE INCOME STATEMENT AND THE STATEMENT OF CASH FLOWS CONTENT ANALYSIS OF EXERCISES AND PROBLEMS Number Content Time Range (minutes) E5-1 Simple Income Statement. (Easy) Periodic inventory system. Multiple-step and single-step format preparation from selected account balances. 15-20 E5-2 Simple Income Statement. (Easy) Perpetual inventory system. Multiple-step and single-step format preparation from selected account balances. 15-20 E5-3 Classifications. (Moderate) Identification of where various items would be reported in the financial statements. 5-10 E5-4 Classifications. (Moderate) Identification of where various items would be reported in the financial statements. 5-10 E5-5 Basic Income Statement. (Moderate) Multiple-step and single-step income statement. IFRS discussion. 20-25 E5-6 Basic Income Statement and Statement of Comprehensive Income. (Moderate) Multiple-step and single-step income statement. Statement of comprehensive income. 20-25 E5-7 Basic Income Statement. (Moderate) Schedule of cost of goods sold. Multiple-step and single-step income statement preparation. 20-25 E5-8 Basic Income Statement and Statement of Comprehensive Income. (Moderate) Schedule of cost of goods sold. Multiple-step and single-step income statement. Statement of comprehensive income. 20-25 E5-9 Income Statement and Retained Earnings. (Moderate) Multiple-step income statement and retained earnings statement. Extraordinary item, dividends, operating loss. Compute return on stockholders' equity. 20-25 E5-10 Income Statement and Retained Earnings. (Moderate) Cost of goods sold schedule. Single-step income statement, retained earnings statement. Extraordinary item, operating loss, obsolete materials, dividends. Compute profit margin. 20-255-2 Number Content Time Range (minutes) E5-11 Income Statement Calculations. (Moderate) Determination of various amounts from partial information. 10-15 E5-12 Income Statement Calculations. (Moderate) Determination of various amounts based on partial information. 15-20 E5-13 Results of Discontinued Operations. (Easy) Preparation of results from discontinued operations section when component is held for sale at end of year. 10-15 E5-14 Results of Discontinued Operations. (Moderate) Preparation of results from discontinued operations section when component is held for sale at end of year. 15-20 E5-15 (AICPA adapted). Income Statement Deficiencies. (Moderate) Identify appropriate and inappropriate disclosures. Provide rationale. 20-25 E5-16 Comprehensive Income. (Moderate) Preparation of income statement and statement of comprehensive income under two different methods. 10-15 E5-17 Net Cash Flow From Operating Activities. (Easy) Preparation of operating activities section of statement of cash flows from list of items. 5-15 E5-18 Operating Cash Flows: Direct Method. (Easy) Prepare cash flows from operating activities section of statement of cash flows, using the direct method. 10-15 E5-19 Statement of Cash Flows. (Moderate) Prepare simple statement of cash flows from a list of items. 10-15 E5-20 Statement of Cash Flows. (Moderate) Prepare simple statement of cash flows from a list of items. 10-15 P5-1 Comprehensive Income. (Moderate) Format preparation of multiple-step income statement, statement of comprehensive income, and retained earnings statement. 30-50 P5-2 Classifications. (Moderate) Matching of various items with reporting component in the financial statements. 15-30 P5-3 Income Statement. (Moderate) Lower portion. Dividends, component disposal, extraordinary item, prior period correction. Retained earnings statement. 20-40 P5-4 Income Statement. (Moderate) Lower portion. Dividends, prior period correction, extraordinary item, change in accounting estimate, sale of division. Retained earnings statement. 20-405-3 Number Content Time Range (minutes) P5-5 Comprehensive. (Moderate) Manufacturing income statement. Supporting schedules, multiple-step income statement, retained earnings statement. Computation of return on stockholders' equity and discussion. IFRS discussion. 40-55 P5-6 Comprehensive. (Moderate) Merchandising income statement. Supporting schedules, single-step income statement, retained earnings statement. Calculation of profit margin and discussion. 40-50 P5-7 Comprehensive. (Moderate) Merchandising income statement. Periodic inventory system. Supporting schedules, multiple-step income statement, retained earnings statement. Computation of return on stockholders' equity and discussion. 40-60 P5-8 Misclassifications. (Moderate) Identification of incorrectly classified items. Preparation of a correct multiple-step income statement and retained earnings statement. 30-50 P5-9 Misclassifications. (Moderate) Preparation of a correctly classified multiple-step income statement and retained earnings statement from one that is misclassified. 20-40 P5-10 Classification. (Moderate) Recognition of unusual and/or infrequent items and indication of where to disclose. 30-45 P5-11 Results of Discontinued Operations. (Moderate) Preparation of journal entry for loss on held-for-sale division. Preparation of income statement including results from discontinued operations section. Preparation of partial balance sheet. 40-60 P5-12 Income Statement and Cash Flow Statement Disclosures. (Moderate) Questions relating to the review of The Coca-Cola Company income statement and cash flow statement disclosures in Appendix A. 20-40 P5-13 (AICPA adapted). Complex Income Statement. (Challenging) Preparation of multiple-step income statement, including results of discontinued operations and extraordinary item. 30-45 P5-14 (AICPA adapted). Income Statements. (Challenging) Comparative. Preparation of a multiple-step comparative statement of income. 30-45 P5-15 (AICPA adapted). Financial Statement Deficiencies. (Moderate) Identification of non-arithmetic errors. 30-45 P5-16 (AICPA adapted). Violations of GAAP. (Moderate) Identification and suggested corrective action. 30-45 P5-17 Comprehensive: Comparative Income Statements. (Challenging) Preparation of comparative income statements. 30-405-4 Number Content Time Range (minutes) P5-18 Net Income and Comprehensive Income. (Moderate) Preparation of income statement and reporting of comprehensive income using three