Question

Which of the following is an example of errors in financial statements? Select one:

a. While working on the financial statements, Maria accidentally adds $500 when the amount was actually $50.

b. While working on the financial statements, Maria recognizes the new estimate for useful lives of their new work truck.

c. While working on the financial statements, Maria decides to implement a new valuation method decided on by the company.

d. While working on the financial statements, Maria makes sure to have other employees check to ensure everything is included.

The company’s accountant forgot to record $25,000 in depreciation expense for the past year. If the books have not been closed then the necessary correcting entry is: Select one:

a. Debit Depreciation Expense, $25,000; Credit Accumulated Depreciation, $25,000.

b. Debit Retained Earnings, $25,000; Credit Accumulated Depreciation, $25,000.

c. Debit Retained Earnings, $25,000; Credit Depreciation Expense, $25,000.

d. Debit Accumulated Depreciation, $25,000; Credit Retained Earnings, $25,000.

The company’s accountant forgot to record $25,000 in depreciation expense for the past year. If the books have been closed then the necessary correcting entry is: Select one:

a. Debit Depreciation Expense, $25,000; Credit Accumulated Depreciation, $25,000.

b. Debit Retained Earnings, $25,000; Credit Accumulated Depreciation, $25,000.

c. Debit Retained Earnings, $25,000; Credit Depreciation Expense, $25,000.

d. Debit Accumulated Depreciation, $25,000; Credit Retained Earnings, $25,000.

Which of the following scenarios requires the company to issue restatements? Select one:

a. Penn West Petroleum capitalized $300 million dollars in operating expenses.

b. Apple backdated its employee stock options to the point when the stock price was at the lowest point in the prior period.

c. Waste Management estimates that its capital assets would have twice the useful lives as the industry averages and inappropriately high salvage values.

d. All of the above. Poland Springs purchased a water Machine two years ago for $120,000 and the asset now has $20,000 in accumulated depreciation.

At the beginning of Year 3, there was a revision in periodic depreciation and the company now estimates that the total estimated life should be six years with a salvage value of $12,000 at the end of that time. Poland Springs uses the straight-line method of depreciation for the machine. What is the amount of depreciation expense the company would recognize in Year 3? Select one:

a. $14,700

b. $18,000

c. $22,000

d. $25,000

At the beginning of 2019, Bayside Co. changed from the recognition overtime (percentage-of-completion) to the completed-contract method for financial reporting purposes. The company will continue to use the completed-contract method for tax purposes. For years prior to 2019, pretax income under the two methods was as follows: percentage-of-completion $278,000, and completed-contract $231,000. The tax rate is 30%.
In preparing its 2019 journal entry to record the change in accounting principle, Construction in Process would be credited by what amount?

Select one:

a. $14,100

b. $32,900

c. $47,000

d. $231,000

At the beginning of 2019, Bayside Co. changed from the recognition overtime (percentage-of-completion) to the completed-contract method for financial reporting purposes. The company will continue to use the completed-contract method for tax purposes. For years prior to 2019, pretax income under the two methods was as follows: percentage-of-completion $278,000, and completed-contract $231,000. The tax rate is 30%.
In preparing its 2019 journal entry to record the change in accounting principle, Deferred Tax Liability would be debited by what amount?

Select one:

a. $14,100

b. $231,000

c. $47,000

d. $32,900

In 2020, Nike discovered that equipment purchased on January 1, 2019, for $63,000 was expensed at that time. The equipment should have been depreciated over 6 years using the straight-line method, with a $6,600 value. The effective tax rate is 40%.
When preparing the 2020 correcting entry, Retained Earnings would be credited by what amount?

Select one:

a. $63,000

b. $9,400

c. $21,440

d. $32,160

Cheyenne, Inc. changed depreciation methods in 2017 from straight-line to double-declining-balance. Depreciation prior to 2017 under straight-line was $107,000, whereas double-declining-balance depreciation prior to 2017 would have been $162,600. Cheyenne’s depreciable assets had a cost of $406,500 with a $32,000 salvage value, and a 5-year remaining useful life at the beginning of 2017
What is the 2017 Depreciation Expense?

Select one:

a. $119,800

b. $93,625

c. $74,900

d. $162,600

Mindzak Corp leases equipment and recognizes a right-of-use asset. This account is increased by

Select one:

a. initial direct costs incurred by the lessee only.

b. lease incentives received.

c. prepaid lease payments only.

d. lease prepayments made by the lessee and initial direct costs incurred by the lessee.

Answer 1

Which of the following is an example of errors in financial statements

Answer: Option ( A)

While working on the financial statements, Maria accidentally adds $500 when the amount was actually $50.

Explanation:

1) Financial Statement includes, Balance sheet, Income Statement , Cash Flow statement and Stockholder's Equity.

2) All of the other options are future planning and controlling,as they actully do not affect any of the financil statement.

New estimated life of new truck,

New valuation method for futre, and

Employees check

3) But, when maria enter $ 500 instead of $ 50, it will have a impact on all the above mentioned financial statements.

4) so only option ( a) is an example of error in financial statement.