AC302 Chapter Review Q &amp,100% CORRECT

1. Question: A change in accounting principle from one that is not generally accepted to one that is generally accepted should be treated as an error and corrected by prior period adjustment ...

1. Question: A change in accounting principle from one that is not generally accepted to one that is generally accepted should be treated as an error and corrected by prior period adjustment a change in accounting principle and the cumulative effect included in net income a change in accounting principle and prior period financial statements are restated a change in accounting principle and adjustments made prospectively \\ Points Received: 2 of 2 Comments: 2. Question: When making a retrospective adjustment, all of the following steps are included except computing the cumulative effect of the new accounting principle as of the beginning of the first period presented adjusting the current period net income for the cumulative effect of the change adjusting the carrying value of impacted assets and liabilities restating the financial statements of each period presented to reflect the effects of the change Points Received: 2 of 2 Comments: 3. Question: A retrospective adjustment requires a change in the prior period financial statements to look like the current period financial statements current period income to reflect the cumulative effect of new method prior period financial statements to reflect how they would have been presented had the new method been used in prior periods current period accounts in the financial statements to what they would have been had the previous method been used in the current period Points Received: 0 of 2 Comments: 4. Question: The mandatory adoption of a new accounting principle as a result of a new FASB statement requires footnote disclosure only a cumulative effect adjustment retrospective adjustment prospective restatement Points Received: 2 of 2 Comments: 5. Question: Which of the following statements does not properly state a basic principle for reporting an accounting change? retrospectively apply a change in accounting principle prospectively account for a change in accounting estimate retrospectively adjust for a change in reporting entity retrospectively apply a change in accounting estimate Points Received: 2 of 2 Comments: 6. Question: The Brown Company changed its method of determining inventories from LIFO to FIFO. This change represents a change in accounting estimate that should be treated prospectively change in accounting principle that should be treated prospectively change in accounting estimate for which the financial results of previous years are restated change in accounting principle for which the financial statements of prior periods included for comparative purposes are restated Points Received: 2 of 2 Comments: 7. Question: A change in accounting estimate effected by a change in accounting principle should be reported as a change in accounting principle a change in accounting estimate and a change in accounting principle a change in accounting estimate neither a change in accounting estimate nor a change in accounting principle Points Received: 0 of 2 Comments: 8. Question: The Tricia Co. presented financial statements for 2010 and 2011 that contained the following errors: 2011 2010 Ending merchandise inventory $700 understated $400 overstated Supplies expense 500 understated 100 overstated Assuming that no correcting entries were made, by how much would retained earnings be understated at January 1, 2012? $1,200 $1,100 $800 $700 Points Received: 0 of 2 Comments: 9. Question: Which of the following errors will normally result in overstatement of 2011 net income? failure to record merchandise purchases in 2010 understatement of 2010 ending merchandise inventory failure to record accrued salaries expense in 2010 overstatement of prepaid expense in 2010 Points Received: 2 of 2 Comments: 10. Question: During a year-end evaluation of the financial records of the Gretchen Company for the year ended December 31, 2010, the following was discovered: • Inventory on January 1, 2010, was understated by $6,000. • Inventory on December 31, 2010, was understated by $18,000. • Rent of $20,000 collected in advance on December 29, 2010, was included in income for 2010. • A probable, reasonably estimated contingent liability of $30,000 was not recorded as of December 31, 2010. Net income for 2010 (before any of the above items) was $100,000. The corrected net income, ignoring income taxes, for 2010 should be $50,000 $58,000 $62,000 $68,000 Points Received: 0 of 2 Comments: Grade for Heather Fehlman: Unit 8 Review Numeric grade: 12/20 Letter grade: Comments: (none) [Show More]