AB10. The following information was extracted from the accounts of the ConFuse Corporation at December 31, 2014.Total reported net income since incorporationTotal cash dividends declared and paidCumulative effect of changes in accountingprinciple (effect is to reduce income)Total stock dividends distributedPrior period adjustment, recordedCDJanuary 1, 2014 (depreciation overstated)Other comprehensive income translation loss)800,000300,000(50,000)100,000What should be the balance of retained earnings at December 31, 2014?A $375,000B$425,000C$525,000D$400,00025,000(50,000)11. A company made a very large arithmetical error in the preparation of its year-end financialstatements by improper placement of a decimal point in the calculation of depreciation. The errorcaused net income to be reported at nearly double the proper amount. Correction of the errorwhen discovered in the following year should be treated as:an increase in depreciation expense for the year in which the error is discovered.A component of income for the year in which the error is discovered, but separately listedon the income statement and fully explained in a note to the financial statements.an extraordinary item for the year in which the error was madea prior period adjustment in the statement of retained earnings.12. Which of the following is true when accounts receivable are factored without recourse?AThe factor assumes the risk of collectability and absorbs any credit losses in collecting the receivables.B The financing cost (interest expense) should be recognized ratably over the collection of the receivables.C The receivables are used as collateral for a promissory note issued to the factor by the owner of the receivablesDThe transaction may be accounted for as a borrowing or as a sale, depending on the substance of the transaction.

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10. The following information was extracted from the accounts of the ConFuse Corporation at December 31, 2014. Total reported net income since incorporation Total cash dividends declared and paid Cumulative effect of changes in accounting principle (effect is to reduce income) Total stock dividends distributed Prior period adjustment, recorded January 1, 2014 (depreciation overstated) Other comprehensive income translation loss) 800,000 300,000 (50,000) 100,000 25,000 (50,000) What should be the balance of retained earnings at December 31, 2014? $375,000 $425,000 $525,000

10. The following information was extracted from the accounts of the ConFuse Corporation at December 31, 2014. Total reported net income since incorporation Total cash dividends declared and paid Cumulative effect of changes in accounting principle (effect is to reduce income) Total stock dividends distributed Prior period adjustment, recorded January 1, 2014 (depreciation overstated) Other comprehensive income translation loss) 800,000 300,000 (50,000) 100,000 25,000 (50,000) What should be the balance of retained earnings at December 31, 2014? $375,000 $425,000 $525,000

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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