Q1. Sales revenue earned from the sale of Mac computers, iPods, iPhones, iPads, iTunes, and other related products and services totals (_________ million / can’t tell) and the cost of those products totals (_________ million / can’t tell).
Q2. Apple’s income statement lists (2 / 3 / ____) operating expense accounts (other than COGS) that total (_____ million. (_________ / operating expenses) is(are) greater (_________ / by a little bit), which is (expected / unexpected) for a manufacturing firm.
Q3. Non-operating revenues and expenses refer to (operating / _________/ _________) revenues and expenses. Interest expense reflects the firm’s cost of borrowing and is a(n) (operating / investing / _________) cost that is classified on the income statement as a(n) (operating / _________) expense. Investment income (does / __________________) result from Apple’s primary business activity, and therefore, should be classified as (operating / _________) revenue. When retailers and manufactures sell inventory (_________/ a gain (loss)) is reported, and when they sell property, plant, and equipment (revenue / ___________ / _________) is reported. For Apple, non-operating revenues and expenses total $155 million.
Q4. Apple’s average income tax rate was (7% / 18% / _________).
Q5. Nonrecurring items are items that occur (_________/ twice / continuously) within the life of a company. Identify each of the following as either a (D)iscontinued or (E)xtraordinary type of nonrecurring item. (_______/ E)PepsiCo sells off Pizza Hut, Taco Bell, and KFC.
(D / E)Due to global warming the tundra melts in Barrow, Alaska, resulting in flooding an entire factory and closing it indefinitely.
IFRS does not allow (D / E) items and has a narrower definition of (_________/ E) items.
Q6. The income statement reports the results of operations (as of a certain date / _________).
Q7Income statement accounts are listed in (alphabetical order / _______________________________________ / no particular order). Therefore, (_______________/ nonrecurring items) are reported at the top and (operating revenues / __________________) are reported at the bottom of the income statement.