Final Pt 2

A change in accounting estimate is always accounted for a. using prior period adjustment b. retrospectively c. using the cumulative effect method d. prospectively

d. prospectively

A change in accounting estimate is always accounted for a. using a prior period adjustment.

d. prospectively.

A change in accounting principle from one that is not generally accepted to one that is generally accepted should be treated as a. an error and corrected and retrospectively restated b. a change in accounting principle and the cumulative effect included in net income c. a change in accounting principle and prior period financial statements are restated d. a change in accounting principle and adjustments made prospectively

a. an error and corrected and retrospectively restated

A company changes from capitalizing and amortizing preproduction costs to recording them as an expense when incurred because future benefits associated with those costs have become doubtful. This accounting change should be recognized as a a. change in accounting estimate b. change in accounting principle c. change in reporting entity d. correction of an error

a. change in accounting estimate

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

Which statement concerning accounting for accounting changes and errors is not true? a. an error is accounted for retrospectively b. a change in accounting principle is accounted for prospectively c. a change in accounting principle may be accounted for retrospectively d. a change in accounting estimate is accounted for prospectively

b. a change in accounting principle is accounted for prospectively

Current GAAP requires a company to account for a change in accounting estimate that impacts multiple periods during

b. the period of change and future periods

Which of the following errors will normally result in overstatement of 2011 net income? a. failure to record merchandise purchases in 2010 b. understatement of 2010 ending merchandise inventory c. failure to record accrued salaries expense in 2010 d. overstatement of prepaid expense in 2010

b. understatement of 2010 ending merchandise inventory

In a periodic inventory system, which of the following errors will normally result in overstatement of 2014 net income? a. failure to record merchandise purchases in 2013 b. understatement of 2013 ending merchandise inventory c. failure to record accrued salaries expense in 2013 d. overstatement of prepaid expense in 2013

b. understatement of 2013 ending merchandise inventory

In December of 2005 a company failed to record a purchase of $10,000 of merchandise inventory. The items were sold to customers in 2005, and thus, were not in the ending inventory count. As of the beginning of 2006 a. No error exists in the general ledger since the inventory was omitted from both purchases and ending inventory. b. An error exists in the general ledger but it is impossible to correct because the purchases account is temporary. c. The 2005 cost of goods sold is understated and retained earnings is overstated. d. The 2006 cost of goods sold will be understated if the purchase is recorded in 2006.

c. The 2005 cost of goods sold is understated and retained earnings is overstated

On December 31, 2014, Ohio Corporation appropriately changed its inventory valuation method to FIFO cost from LIFO cost for both financial statement and income tax purposes. The change will result in a $140,000 increase in the beginning inventory at January 1, 2014. Ignoring tax the cumulative adjustment to the general ledger will include a. no adjustment. b. a credit to inventory of $140,000. c. a credit of 140,000 to retained earnings. d. a credit of $140,000 to Cost of Goods Sold.

c. a credit of 140,000 to retained earnings

At the end of 2014 a company made a $4,000 rent payment for the first month of the following year. The payment was recorded as rent expense in 2004. The treatment results in a. no error. b. overstatement of 2015 income and understatement of 2015 income . c. understatement of 2014 income and overstatement of 2015 income. d. understatement of 2014 income but no error in 2015 income.

c. understatement of 2014 income and overstatement of 2015 income

Which of the following is the proper time period in which to record a change in accounting estimate

current period and future periods

The mandatory adoption of a new accounting principle as a result of a new FASB statement requires a. footnote disclosure only b. prospective restatement c. retrospective adjustment d. account treatment following the specific guidance of the new standard

d. account treatment following the specific guidance of the new standard

GAAP states that a change in accounting principle includes a. a change from one GAAP to another GAAP. b. a change in accounting principle because the principle formerly used is no longer generally accepted. c. a change in the method of applying an accounting principle. d. all of these choices

d. all of these choices

At the end of 2014 a company failed to recognize accrued interest on long-term debt for the month of December. On the next payment date, January 5, 2015, the omission was discovered. To correct the general journal the company should a. recognize the expense with the January 5th payment to catch up. b. do nothing, since the error is self-correcting. c. increase retained earnings for the December amount. d. decrease retained earnings for the December amount.

d. decrease retained earnings for the December amount

IFRS differ from U.S. GAAP regarding the indirect effects of a change in accounting principle in that IFRS

do not specify when the indirect effects should be reported or what disclosures are required

An understatement of reported net income for the current year may result from

failure to record accrued interest revenue

When disclosing the impact of a retrospective adjustment for the change from LIFO to FIFO in 2017, which of the following impacts is not expected to be reported in the comparative financial statements when two-year comparative statements are presented?

impact on ending inventory for 2017

Which of the following should be reported as a change in accounting estimate?

increase in bad debt rate applied to net sales

Which of the following accounting treatments is proper for a change in reporting entity?

restatement of all financial statements presented

Generally accepted methods of accounting for a change in accounting principle include .

restating prior years' financial statements presented for comparative purposes

A change from LIFO to FIFO should be accounted for

retrospectively

Which of the following errors will normally result in overstatement of 2017 net income?

understatement of 2016 ending merchandise inventory