1. How are errors corrected when they are discovered in the current year? In a subsequent...

1. How are errors corrected when they are discovered in the current year? In a subsequent year? Utilize at least one online resource to support your response.

2. The directors of The Dress Shoppe are considering declaring either a stock dividend or a stock split. They have asked you to explain the difference between a stock dividend and a stock split and the accounting for a small stock dividend versus a large stock dividend.

Expert Solution

As per policy, only one question is allowed to answer at a time, so answering Q 1 :

Answer 1) Errors which are discovered in the same financial year of reporting, then the correction of the error is made through following steps : a) first correct entry is determined of the error entry, b) amount of effect of on accounts is calculated and c) make the rectification of entry towards correction of error.

When the error is only determined in the subsequent year of the concerned year in which error committed, then the corrective entry is made in a manner that the error has not taken place and a fresh entry is made towards the rectification. The refresh entry after getting merged with the opening accounts balance will correct error made in the prior period. These errors are : i) missing out to enter the depreciation adjustment entry ii) under or over statement of inventory and no adjusting entry made.

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ekkarill92 answered 1 year ago

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1. How are errors corrected when they are discovered in the current year? In a subsequent...

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