problem : financial accounting Question:When does the relative reliability principle override theabsolute accuracy concept?a) When exact numbers are easily availableb) When reasonable estimates provide more timelyinformationc) Only during tax preparationd) In monthly closing procedures

Explanation of Relative Reliability Principle: The relative reliability principle is a fundamental…

Answered: Question: When does the relative…

Financial Accounting Intro Concepts Meth/Uses

14th Edition

ISBN:9781285595047

Author:Weil

Publisher:Weil

Chapter12: Liabilities: Off-balance-sheet Financing, Retirement Benefits, And Income Taxes

Section: Chapter Questions

Problem 15Q

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Using IFRS, how should prior period errors that are discovered in a subsequent reporting period be recognized in the financial statements? a. As an adjustment to beginning retained earnings for the reporting period in which the error was discovered. b. As a note in the financial statements that the error was previously made but has since been corrected. c. In the current period if it’s not considered practicable to report it retrospectively. d. In the statement of comprehensive income.
Alternative Accounting Treatments a. Estimate the amount of liability and record. b. Do not record as a liability but disclose in a footnote to the financial statements. c. Neither record as a liability nor disclose in a footnote to the financial statements. Required: Match the appropriate alternative accounting treatment with each of the potential contingent liabilities listed below. Potential Contingent Liabilities 1. Income taxes related to revenue included in net income this year but taxable in a future year. 2. Potential costs in future periods associated with performing warranty services on products sold this period. 3. Estimated cost of future services under a product warranty related to past sales. 4. Estimated cost of future services under a product warranty related to future sales. 5. Estimated cost of pension benefits related to past employee services that has yet to be funded. 6. Potential loss on environmental cleanup suit against company; a court judgment against the…
If the income statement error is discovered in a subsequent accounting period, what action is to be done by the entity? Group of answer choices a. Reclassify the item to its proper nominal account and restate the income statement of the prior year affected by the error. b. Restate the income statement of the prior year affected by the error. c. No reclassifying entry is necessary but restate the income statement of the prior year affected by the error. d. Reclassify the item to its proper nominal account. Recording of next year's sales as sales of the current year will Group of answer choices a. overstate net income of next year b. not affect retained earnings at the end of next year c. understate retained earnings at the end of the current year d. understate net income of the current year
An example of an item that should be reported as a prior-period adjustment in a company’s annual financial statements is a. a settlement resulting from litigation. b. an adjustment of income taxes. c. a correction of an error that occurred in a prior period. d. an adjustment of utility revenue because of rate revisions ordered by a regulatory commission.
What impact may the low accuracy of accounting estimates have on the annual statements?
Which of the following statements about a change in accounting estimate is not true? A. A change in accounting estimate can only be made when it is required to comply with an accounting standard or interpretation. B. Changes in accounting estimates result from new information or new developments. C. The effects of a change in accounting estimate should be applied prospectively. D. A change in estimate is an adjustment of the carrying amount of an asset or a liability, or the amount of the periodic consumption of an asset.
Prospective application of recognizing the effect of a change in an accounting estimate means A. correcting the recognition, measurement and disclosure of amounts of elements of financial statements as if a prior period error had never occured B. recognizing the effect of the change in the accounting estimate in the current and future periods affected by the change C. applying a new accounting policy to transactions other events and conditions as if the policy had always been applied D. Any of the choices
Accountants very often are required to make estimates, and very often those estimates prove incorrect. In what period(s) is the effect of a change in an accounting estimate reported?
Explain who needs to pay estimated taxes, when to file or amend your return, and how to handle an audit.
The change in accounting estimate should be treated currently and prospectively. True or false
What are the implications of a revised accounting estimate?
Which of the following statements is correct? Options: • The net income would still be the same regardless of accounting method that is used whether cash basis or accrual basis • Pre-collections initially recorded as income will overstate the profit at the end of the accounting period if no adjustment is done for unearned portion • Deferral is intended to recognize income earned but not yet received • Accrual of expenses will increase the expense element and will correspondingly decrease the liability

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Question: When does the relative reliability principle override the absolute accuracy concept? a) When exact numbers are easily available b) When reasonable estimates provide more timely information c) Only during tax preparation d) In monthly closing procedures