Reported earnings become overstated as a result of failure to record which of the following: a. the amortization of premium on bonds payable b. a contingent liability c. the dividends in arrears on the outstanding d. an accrued liability
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Reported earnings become overstated as a result of failure to record which of the following:
a. the amortization of premium on bonds payable
b. a
c. the dividends in arrears on the outstanding
d. an accrued liability
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Solved in 2 steps
- When using the allowance method, failure to record bad debt expense would have what effect on the accounting equation?: Assets Liabilities Stockholder's Equity A. No Effect No Effect No Effect В. Overstated No Effect Overstated С. Understated No Effect Understated D. Overstated Overstated Overstated Е. No Effect Understated Overstated Which of the following statements is FALSE?Which method delays recognition of bad debt until the specific customer accounts receivable is identified? A. income statement method B. balance sheet method C. direct write-off method D. allowance methodWhich of the following transaction costs will not be included in the pro-forma adjustment to net earnings? Debt refinancing premium Other transaction costs Equity financing fees Amortization of debt financing fees
- 49The collection of debtors’ accounts has the following effect on the financial statements: A. Increases income. B. None of the options provided. C. Increases owners' equity. D. Increases total assets.Which of the following is a counterbalancing error? O bond premium under-amortized O understated depletion expense overstated depreciation expenses prepaid expense adjusted incorrectlyA contingency that need not be disclosed in the financial statements or in the notes thereto is: A. pending litigation B. possibility of strike. C. deficiency tax assessment. D. note receivable discounted. Of the following items, the one which should be classified as a current liability is: A. an accommodation endorsement. B. a cash dividend declared before the balance sheet date when the date of record is subsequent to the balance sheet date. C. unfunded past service cost of a pension plan. D. dividends in arrears on cumulative preferred stock. Which of the following statements is true concerning contingent liabilities? A. Such liabilities should include obligations of known existence but of unknown amount B. If the definite amount is involved, it is not a contingent liability. C. Such liabilities are generally reported and totaled with other liabilities to make up the liability section of most balance sheets. D. Such liabilities should include obligations known in amount but…
- Failure to accrue interest expense results ina. an overstatement of net income and an understatement of liabilities.b. an understatement of net income and an overstatement of liabilities.c. an understatement of net income and an understatement of liabilities.d. an overstatement of net income and an overstatement of liabilities.. These are decreases in economic benefits during the accounting period in the form of outflows or depletions of assets or incurrences of liabilities that result in decreases in equity, other than those relating to distributions to equity participants. a. Liabilities b. Expense c. Loss d. Cost4. Which of the following items will appear in the statement of changes in equity? a. Extraordinary loss b. Write-off of goodwill c. Transaction instruments d. Transaction costs directly related to issuance of equity instruments costs directly related to issuance of debt
- Recording bad debt expense under the allowance method will have what effect on the financial statements? Select one: a. Profit is unchanged and total assets decrease b. Profit decreases and total assets is unchanged c. Profit is unchanged and total assets is unchanged d. Profit increases and total assets decrease e. Profit decreases and total assets decreaseWhich of the following is not a liability? A. Notes payable. B. Current portion of long-term debt. C. Deferred revenue. D. An unused line of credit.Which item below is not a current liability? Select one: O O a. Unearned revenue b. Trade accounts payable c. cash dividends d. The currently maturing portion of long-term debt