A. MATCHING For each numbered item below, match the letter from the following list, which best describes the proper treatment of the item on the financial statements. 123 2) 3) A. Adjust the current and future financial statements to reflect the new information. Make no correction of past year's information (e.g. Change in Accounting Estimate). B. Correct the financial statements of all prior years presented and adjust the beginning balance of retained earnings (net of tax) to correct for all mistakes, oversights, unintentional errors, or misuse of facts. (e.g. Prior Period Adjustment) C. Restate the financial statements of all prior periods presented under the new basis, and adjust beginning retained earnings of the earliest year presented, if the change affected years prior to those presented. (i.e. Change in Accounting Principle, Retroactive Approach) D. Restate financial statements of prior periods presented, as if the new accounting entity had existed all along. (i.e. Change in Accounting Entity) E. Because it is impossible or impractical to recast all prior years under the new basis, adjust only the current and future financial statements to reflect the new basis (i.e. Change in Accounting Principle, Exception to General Rule). F. None of the above. Change from straight-line to sum-of-years'-digits method of depreciation. Change in the life assigned to a depreciable asset. Understatement of inventory last year due to an incorrect formula in a spreadsheet. Change from cash basis accounting to accrual basis accounting. Change in the companies included in combined financial statements. Change in the estimated loss rate on warranty costs. 7) A change from the FIFO to the LIFO method of inventory valuation. 8) 9) 10) A change in either an accounting estimate or accounting principle - it is impossible to tell which. A change from the LIFO to the FIFO method of inventory valuation. The company changed its practice of deferring and amortizing preproduction costs to expensing such cost as they are incurred.
A. MATCHING For each numbered item below, match the letter from the following list, which best describes the proper treatment of the item on the financial statements. 123 2) 3) A. Adjust the current and future financial statements to reflect the new information. Make no correction of past year's information (e.g. Change in Accounting Estimate). B. Correct the financial statements of all prior years presented and adjust the beginning balance of retained earnings (net of tax) to correct for all mistakes, oversights, unintentional errors, or misuse of facts. (e.g. Prior Period Adjustment) C. Restate the financial statements of all prior periods presented under the new basis, and adjust beginning retained earnings of the earliest year presented, if the change affected years prior to those presented. (i.e. Change in Accounting Principle, Retroactive Approach) D. Restate financial statements of prior periods presented, as if the new accounting entity had existed all along. (i.e. Change in Accounting Entity) E. Because it is impossible or impractical to recast all prior years under the new basis, adjust only the current and future financial statements to reflect the new basis (i.e. Change in Accounting Principle, Exception to General Rule). F. None of the above. Change from straight-line to sum-of-years'-digits method of depreciation. Change in the life assigned to a depreciable asset. Understatement of inventory last year due to an incorrect formula in a spreadsheet. Change from cash basis accounting to accrual basis accounting. Change in the companies included in combined financial statements. Change in the estimated loss rate on warranty costs. 7) A change from the FIFO to the LIFO method of inventory valuation. 8) 9) 10) A change in either an accounting estimate or accounting principle - it is impossible to tell which. A change from the LIFO to the FIFO method of inventory valuation. The company changed its practice of deferring and amortizing preproduction costs to expensing such cost as they are incurred.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
Transcribed Image Text:A. MATCHING
For each numbered item below, match the letter from the following list, which best describes the proper treatment of the item on
the financial statements.
123
2)
3)
A. Adjust the current and future financial statements to reflect the new information. Make no correction of past year's
information (e.g. Change in Accounting Estimate).
B. Correct the financial statements of all prior years presented and adjust the beginning balance of retained earnings (net of
tax) to correct for all mistakes, oversights, unintentional errors, or misuse of facts. (e.g. Prior Period Adjustment)
C. Restate the financial statements of all prior periods presented under the new basis, and adjust beginning retained earnings
of the earliest year presented, if the change affected years prior to those presented. (i.e. Change in Accounting Principle,
Retroactive Approach)
D. Restate financial statements of prior periods presented, as if the new accounting entity had existed all along. (i.e. Change
in Accounting Entity)
E. Because it is impossible or impractical to recast all prior years under the new basis, adjust only the current and future
financial statements to reflect the new basis (i.e. Change in Accounting Principle, Exception to General Rule).
F. None of the above.
Change from straight-line to sum-of-years'-digits method of depreciation.
Change in the life assigned to a depreciable asset.
Understatement of inventory last year due to an incorrect formula in a spreadsheet.
Change from cash basis accounting to accrual basis accounting.
Change in the companies included in combined financial statements.
Change in the estimated loss rate on warranty costs.
7)
A change from the FIFO to the LIFO method of inventory valuation.
8)
9)
10)
A change in either an accounting estimate or accounting principle - it is impossible to tell which.
A change from the LIFO to the FIFO method of inventory valuation.
The company changed its practice of deferring and amortizing preproduction costs to expensing such cost as
they are incurred.
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
Step by step
Solved in 2 steps
Recommended textbooks for you
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education