Question Through which method should companies report corrections of accounting errors? a) Cumulative effect in current income b) Prior period adjustment to retained earnings c) Prospective change in estimates d) Operating expense adjustment

Question Through which method should companies report corrections of accounting errors? a) Cumulative effect in current income b) Prior period adjustment to retained earnings c) Prospective change in estimates d) Operating expense adjustment

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

Chapter22: Accounting For Changes And Errors.

Section: Chapter Questions

Problem 1MC: The cumulative effect of an accounting change should generally be reported as an adjustment to the...

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How are unusual or infrequent gains or losses reported on a company's income statement?
Which of the following is a measurement of earnings that represents the profit before interest, taxes, depreciation and amortization are subtracted? A. net income B. retained earnings C. EBITDA D. EPS
A prior period adjustment should be reflected, net of applicable income taxes, in the financial statements of a business entity in the: a. retained earnings statement after net income but before dividends b. retained earnings statement as an adjustment of the opening balance c. income statement after income from continuing operations d. income statement as part of income from continuing operations
The effect of a revision of an accounting estimate must be recognised in profit and loss in which reporting periods? In the present, prior (by adjusting retained earnings) and future periods affected. In the present and future periods affected. In the present and prior reporting periods (by adjusting retained earnings). Not recognised in any period.
Generally accepted methods of accounting for a change in accounting principle include O ncluding the cumulative effect of the change in current period net income. restating prior years' financial statements presented for comparative purposes. O making a prior period adjustment. O prospective changes.
Where a change in accounting estimates occurs, which of the following should be disclosed? A. The nature of the change and the impact on previous income statements The fact that the amount of the effect on future periods will not be disclosed because B. estimating that amount is impracticable and the reason for the change and comparative data to show the impact with and without the change The fact that the amount of the effect on future C. periods will not be disclosed because estimating that amount is impracticable D. The reason for the change and comparative data to show the effect with and without the change
A change in accounting policy requires that the cumulative effect of change for prior periods should be reported as an adjustment to: a. Beginning retained earnings for the earliest period presented b. Net income for the period in which the change occurred c. Comprehensive income for the earliest period presented d. Shareholders’ equity for the period in which the change occurred
Generally accepted methods of accounting for a change in accounting principle include restating prior years' financial statements presented for comparative purposes. making a prior period adjustment. prospective changes. including the cumulative effect of the change in current period net income.
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What impact may the low accuracy of accounting estimates have on the annual statements?
A change in accounting policy requires what kind of adjustment to thefinancial statements? A. Current period adjustmentB. Prospective adjustmentC. Retrospective adjustmentD. Current and prospective adjustment
What are interim financial statements? Do accounts thatappear in a company’s interim balance sheet require anyspecial computations to be reported correctly? Explain.