7. S1: The publication of interim financial reports is on a quarterly basis.S2: Forfinancial statements at interim date, inventories shall be measured using thegross profit method because conducing inventory count is not required. *A. Both statements are trueB. Both statements are falseC. Only statement 1 is trueD. Only statement 2 is true8. The following statements are incorrect about interim reporting, exceptA. A complete set of financial statements must be presented for an interim period.B. A condensed set of financial statements must be presented for an interim period.C. Interim reports require the preparation of only a statement of financial position andstatement of comprehensive income.D. Preparation of interim reports generally requires a greater use of estimation thanannual financial reports.E. None of them

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7. S1: The publication of interim financial reports is on a quarterly basis.S2: For financial statements at interim date, inventories shall be measured using the gross profit method because conducing inventory count is not required. * A. Both statements are true B. Both statements are false C. Only statement 1 is true D. Only statement 2 is true

7. S1: The publication of interim financial reports is on a quarterly basis.S2: For financial statements at interim date, inventories shall be measured using the gross profit method because conducing inventory count is not required. * A. Both statements are true B. Both statements are false C. Only statement 1 is true D. Only statement 2 is true

Intermediate Accounting: Reporting And Analysis

3rd Edition

ISBN:9781337788281

Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Chapter8: Inventories: Special Valuation Issues

Section: Chapter Questions

Problem 21GI: Indicate the effect of each of the following errors on the following balance sheet and income...

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1. If the inventory account at the end of the year is understated, the effect will be to a.overstate the gross profit on sales. b.understate the net purchases. c. overstate the cost of goods sold. d.overstate the goods available for sale 2. Which one among the following statements is not a characteristic of the integral view of presenting interim financial statements? a.It is the more acceptable view. b.Each interim period is recognized as a separate accounting period, regardless of the length of time involved. c. Each interim period is a part of the annual period. d.The revenues and expenses for the annual period are allocated among interim periods 3. What is correct concerning the 75% overall size test for operating segments? a. The total external and internal revenue of all reportable segments is 75% or more of the entity’s external revenue. b. The total external revenue of all reportable segments is 75% or more of the entity’s external and internal revenue. c. The total external…
A list of errors is shown below: Show the effects of the errors on the indicated balance sheet and income statement items. Choose 1 of the three options: Overstated, Understated, No Effect T Errors Cost of Goods Sold Retained Earnings Year-End Working Capital Ending inventory is overstated Beginning inventory is overstated Ending inventory is understated Beginning inventory is understated Purchases is overstated (recorded twice) Purchases is understated (not recorded)
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2. Gabriela Company’s auditor discovered that the company inadvertently overstated ending Inventory for the prior year. If the error is not corrected, what effect will the error have on the following financial statement items for both the prior year and the current year? Indicate in each box a “+" (plus) if the item is overstated, a “-“ (minus) if the item is understated, and a “N/A" if there is no effect on the item. Prior Year Current Year Effect on Income Statement Goods Available for Sale Cost of Goods Sold Gross Profit Net Income Effect on Balance Sheet Inventory on 12/31 Retained Earnings
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The inventory at the end of the year was understatedby $14,750. (a) Did the error cause an overstatementor an understatement of the gross profit forthe year? (b) Which items on the balance sheet atthe end of the year were overstated or understatedas a result of the error?
Required a. Compute the balance in trade accounts payable as of December 31, Year 4. b. Compute the balance in retained earnings as of December 31, Year 4. c. Compute the balance in the inventory account as of December 31, Year 4. (Assume that the level of invertory did not change from last year.) (For all requirements, negative amounts should be indicated by a minus sign. Do not round intermediate calculations. Round your answers to the nearest whole dollar amount.) Accounts payable 2$ 70,000 a. b. Retained earnings c. Inventory
WMC uses a periodic inventory system and the FIFO cost method. Required: 1. Determine the effect of these errors on retained earnings at January 1, 2021, before any adjustments. (Ignore income taxes.) 2. Prepare a journal entry to correct the errors.
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F.23.
The gross profit method is more reliable than retail inventory method so it is allowed for annual financial reporting under GAAP. True false
nt 33. On a worksheet of a merchandising entity that uses periodic inventory system, both Purchases and Purchases Returns and Allowances appear in the Income Statement columns. (1 Point) True False 34. The debit balance of the inventory account in the trial balance under the periodic inventory system is the amount of the inventory at the end of the current year. (1 Point) True False