Question 1

How are accounting errors treated?

Accepted Answer

Accounting errors are treated retrospect

Question 2

Most,but not all,changes in accounting principle are reported using the retrospective approach.

Accepted Answer

A) True 
 B)False

Question 3

A change in the residual value of equipment is accounted for:

Accepted Answer

A) As a prior period adjustment. 
B) Prospectively. 
C) Retrospectively. 
D) None of these answer choices is correct. 
A) As a prior period adjustment. 
B) Prospectively. 
C) Retrospectively. 
D) None of these answer choices is correct.

Question 4

All changes in estimate are accounted for retrospectively.

Accepted Answer

A) True 
 B)False

Question 5

Which of the following is not a change in reporting entity?

Accepted Answer

A) Reporting using comparative financial statements for the first time. 
B) Changing the companies that comprise a consolidated group. 
C) Presenting consolidated financial statements for the first time. 
D) All are changes in reporting entity. 
A) Reporting using comparative financial statements for the first time. 
B) Changing the companies that comprise a consolidated group. 
C) Presenting consolidated financial statements for the first time. 
D) All are changes in reporting entity.

Question 6

Which of the following statements is not true regarding the correction of an error?

Accepted Answer

A) The correction is reported prospectively and previous financial statements are not revised. 
B) A journal entry is needed to correct any account balances that are incorrect as a result of the error. 
C) Prior years' financial statements are restated to reflect the correction of the error (if the error affected those statements). 
D) A disclosure note should describe the nature of the error and the impact of its correction on net income,income before extraordinary items,and earnings per share. 
A) The correction is reported prospectively and previous financial statements are not revised. 
B) A journal entry is needed to correct any account balances that are incorrect as a result of the error. 
C) Prior years' financial statements are restated to reflect the correction of the error (if the error affected those statements). 
D) A disclosure note should describe the nature of the error and the impact of its correction on net income,income before extraordinary items,and earnings per share.

Question 7

In 2016,due to a change in marketing forecasts,Barney Corporation reduced the projected life of its patent for producing round dice.The cumulative patent amortization prior to 2016 would have been $10 million higher had the new life been used.Barney's tax rate is 30%.Barney's retained earnings as of December 31,2016,would be:

Accepted Answer

A) Overstated by $7 million. 
B) Overstated by $3 million. 
C) Overstated by $10 million. 
D) Unaffected. 
A) Overstated by $7 million. 
B) Overstated by $3 million. 
C) Overstated by $10 million. 
D) Unaffected.

Question 8

If undetected,what is the effect of this error on Berkshire's 12/31/2015 balance sheet?

Accepted Answer

A) Assets understated by $600,000 and shareholders' equity understated by $600,000. 
B) Assets understated by $420,000 and shareholders' equity understated by $420,000. 
C) Assets understated by $600,000,liabilities understated by $180,000,and shareholders' equity understated by $420,000. 
D) None of the above is correct. 
A) Assets understated by $600,000 and shareholders' equity understated by $600,000. 
B) Assets understated by $420,000 and shareholders' equity understated by $420,000. 
C) Assets understated by $600,000,liabilities understated by $180,000,and shareholders' equity understated by $420,000. 
D) None of the above is correct.

Question 9

Venice Company purchased a gondola for $440,000 (no residual value)at the beginning of 2013.The gondola was being depreciated over a 10-year life using the sum-of-the-years'-digits method.At the beginning of 2016,it was decided to change to straight-line.Ignoring taxes,the 2016 adjusting entry will include a debit to depreciation expense of:

Accepted Answer

A) $76,000 
B) $44,000 
C) $32,000 
D) $22,000 
A) $76,000 
B) $44,000 
C) $32,000 
D) $22,000

Question 10

What is the effect of the error on Berkshire's 12/31/2016 balance sheet?

Accepted Answer

A) There are no errors in the 12/31/2016 balance sheet. 
B) Assets understated by $600,000 and shareholders' equity understated by $600,000. 
C) Assets understated by $420,000 and shareholders' equity understated by $420,000. 
D) Liabilities understated by $180,000 and shareholders' equity overstated by $420,000. 
A) There are no errors in the 12/31/2016 balance sheet. 
B) Assets understated by $600,000 and shareholders' equity understated by $600,000. 
C) Assets understated by $420,000 and shareholders' equity understated by $420,000. 
D) Liabilities understated by $180,000 and shareholders' equity overstated by $420,000.

Question 11

Which of the following is not a change in accounting principle that usually is accounted for by retrospectively revising prior financial statements?

Accepted Answer

A) Change from FIFO to the average method of inventory costing. 
B) Change from SYD to DDB depreciation. 
C) Change from the average method of inventory costing to FIFO. 
D) Change from the LIFO to the FIFO method of inventory costing. 
A) Change from FIFO to the average method of inventory costing. 
B) Change from SYD to DDB depreciation. 
C) Change from the average method of inventory costing to FIFO. 
D) Change from the LIFO to the FIFO method of inventory costing.

Question 12

If inventory is understated at the end of 2015 and the error is not discovered,how will net income be affected in 2016?

Accepted Answer

If inventory is understated at the end o

Question 13

How many acceptable approaches are there for changes in accounting principles?

Accepted Answer

A) One. 
B) Two. 
C) Three. 
D) Four. 
A) One. 
B) Two. 
C) Three. 
D) Four.

Question 14

Which of the following is an example of a change in accounting principle?

Accepted Answer

A) A change in inventory costing methods. 
B) A change in the estimated useful life of a depreciable asset. 
C) A change in the actuarial life expectancies of employees under a pension plan. 
D) Consolidating a new subsidiary. 
A) A change in inventory costing methods. 
B) A change in the estimated useful life of a depreciable asset. 
C) A change in the actuarial life expectancies of employees under a pension plan. 
D) Consolidating a new subsidiary.

Question 15

Which of the accounting changes listed below is more associated with financial statements prepared in accordance with U.S.GAAP than with International Financial Reporting Standards (IFRS)?

Accepted Answer

A) Change in estimated useful life of depreciable assets. 
B) Change from the FIFO method of costing inventories to the LIFO method. 
C) Change in depreciation method. 
D) Change in reporting entity. 
A) Change in estimated useful life of depreciable assets. 
B) Change from the FIFO method of costing inventories to the LIFO method. 
C) Change in depreciation method. 
D) Change in reporting entity.

Question 16

Z Company acquired a subsidiary several years ago that was appropriately excluded from consolidation last year.This year Z has consolidated the subsidiary in its financial statements.This results in:

Accepted Answer

A) An accounting change that should be reported prospectively. 
B) A correction of an error. 
C) An accounting change that should be reported by restating the financial statements of all prior periods presented. 
D) Neither an accounting change nor a correction of an error. 
A) An accounting change that should be reported prospectively. 
B) A correction of an error. 
C) An accounting change that should be reported by restating the financial statements of all prior periods presented. 
D) Neither an accounting change nor a correction of an error.

Question 17

What is the effect of the error on Berkshire's 2016 income statement?

Accepted Answer

A) Net income is understated by $420,000. 
B) Cost of goods sold is understated by $420,000. 
C) There are no errors in the 2016 income statement. 
D) None of these answer choices is correct. 
A) Net income is understated by $420,000. 
B) Cost of goods sold is understated by $420,000. 
C) There are no errors in the 2016 income statement. 
D) None of these answer choices is correct.

Question 18

Which of the following is not one of the approaches for reporting accounting changes?

Accepted Answer

A) The change approach. 
B) The retrospective approach. 
C) The prospective approach. 
D) All of these answer choices are approaches for reporting accounting changes. 
A) The change approach. 
B) The retrospective approach. 
C) The prospective approach. 
D) All of these answer choices are approaches for reporting accounting changes.

Question 19

An accounting change that is reported by the prospective approach is reflected in the financial statements of:

Accepted Answer

A) Prior years only. 
B) Prior years plus the current year. 
C) The current year only. 
D) Current and future years. 
A) Prior years only. 
B) Prior years plus the current year. 
C) The current year only. 
D) Current and future years.

Question 20

Retrospective restatement usually is appropriate for a change in:

Accepted Answer

The answer of Retrospective restatement usually is appropriate for a...

How are accounting errors treated?

Most,but not all,changes in accounting principle are reported using the retrospective approach.

A change in the residual value of equipment is accounted for:

All changes in estimate are accounted for retrospectively.

Which of the following is not a change in reporting entity?

Which of the following statements is not true regarding the correction of an error?

If undetected,what is the effect of this error on Berkshire's 12/31/2015 balance sheet?

What is the effect of the error on Berkshire's 12/31/2016 balance sheet?

Which of the following is not a change in accounting principle that usually is accounted for by retrospectively revising prior financial statements?

If inventory is understated at the end of 2015 and the error is not discovered,how will net income be affected in 2016?

How many acceptable approaches are there for changes in accounting principles?

Which of the following is an example of a change in accounting principle?

Which of the accounting changes listed below is more associated with financial statements prepared in accordance with U.S.GAAP than with International Financial Reporting Standards (IFRS)?

Z Company acquired a subsidiary several years ago that was appropriately excluded from consolidation last year.This year Z has consolidated the subsidiary in its financial statements.This results in:

What is the effect of the error on Berkshire's 2016 income statement?

Which of the following is not one of the approaches for reporting accounting changes?

An accounting change that is reported by the prospective approach is reflected in the financial statements of:

Retrospective restatement usually is appropriate for a change in:

Environment and Theoretical Structure of Financial Accounting

Review of the Accounting Process

The Balance Sheet and Financial Disclosures

The Income Statement, comprehensive Income, and the Statement of Cash Flows

Income Measurement

Time Value of Money Concepts

Cash and Receivables

Inventories: Measurement

Inventories: Additional Issues

Property, plant, and Equipment and Intangible Assets: Acquisition and Disposition

Property, plant, and Equipment and Intangible Assets: Utilization and Impairment

Investments

Current Liabilities and Contingencies

Bonds and Long-Term Notes

Leases

Accounting for Income Taxes

Pensions and Other Postretirement Benefits

Shareholders Equity

Share-Based Compensation and Earnings Per Share

The Statement of Cash Flows

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Exam 20: Accounting Changes

How are accounting errors treated?

Most,but not all,changes in accounting principle are reported using the retrospective approach.

A change in the residual value of equipment is accounted for:

All changes in estimate are accounted for retrospectively.

Which of the following is not a change in reporting entity?

Which of the following statements is not true regarding the correction of an error?

If undetected,what is the effect of this error on Berkshire's 12/31/2015 balance sheet?

What is the effect of the error on Berkshire's 12/31/2016 balance sheet?

Which of the following is not a change in accounting principle that usually is accounted for by retrospectively revising prior financial statements?

If inventory is understated at the end of 2015 and the error is not discovered,how will net income be affected in 2016?

How many acceptable approaches are there for changes in accounting principles?

Which of the following is an example of a change in accounting principle?

Which of the accounting changes listed below is more associated with financial statements prepared in accordance with U.S.GAAP than with International Financial Reporting Standards (IFRS)?

Z Company acquired a subsidiary several years ago that was appropriately excluded from consolidation last year.This year Z has consolidated the subsidiary in its financial statements.This results in:

What is the effect of the error on Berkshire's 2016 income statement?

Which of the following is not one of the approaches for reporting accounting changes?

An accounting change that is reported by the prospective approach is reflected in the financial statements of:

Retrospective restatement usually is appropriate for a change in:

Environment and Theoretical Structure of Financial Accounting

Review of the Accounting Process

The Balance Sheet and Financial Disclosures

The Income Statement, comprehensive Income, and the Statement of Cash Flows

Income Measurement

Time Value of Money Concepts

Cash and Receivables

Inventories: Measurement

Inventories: Additional Issues

Property, plant, and Equipment and Intangible Assets: Acquisition and Disposition

Property, plant, and Equipment and Intangible Assets: Utilization and Impairment

Investments

Current Liabilities and Contingencies

Bonds and Long-Term Notes

Leases

Accounting for Income Taxes

Pensions and Other Postretirement Benefits

Shareholders Equity

Share-Based Compensation and Earnings Per Share

The Statement of Cash Flows

Filters