The correction of an error in the financial statements of a prior period should be reported, net of applicable income taxes, in the current:
In the current retained earnings statement as an adjustment of opening balance | |
Prior period errors should be corrected in the current year by adjusting to the retained earnings statement. Comment if you face any issues |
The correction of an error in the financial statements of a prior period should be reported, net of applicable income ta...
OPTIONS
Type of Change: Correction of a Prior Period
Error, Change in Accounting Estimate, Change in Accounting
Policy
Change (or correction) to be Made:
Prospectively, Retrospectively
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For each of the following situations, identify whether the change (or correction) should be made prospectively or retrospectively. Change (or correction) to be Made Type of Change (a) When the company purchased a piece of machinery several years ago, the accounting clerk posted the journal entry to “maintenance expense"...
Speedy Corporation reported net income of $465,000 for the current year. After the financial statements had been prepared, it was discovered that ending inventory had been understated by $45,000. If the tax rate is 40%, after the error has been corrected, net income, after tax, will: Question 35 options: A) increase by $45,000. B) decrease by $45,000. C) decrease by $27,000. D) increase by $27,000.
Multiple Choice Questions (circle the one most appropriate answer) 10. A correction of an error in prior periods' income will be reported: In the current income statement Net of tax A. Yes Yes B. No No C. Yes No D. No Yes 11. For Viggo Company, the following information is available: Cost of goods sold $340,000 Dividend revenue 30,000 Income tax expense 34,000 Operating expenses 210,000 Sales revenue 690,000 In Viggo’s multiple-step income statement, gross...
"Cuthbert Industrials, Inc. prepares three-year comparative financial statements. In year 3, Cuthbert discovered an error in the previously issued financial statements for year 1. The error affects the financial statements that were issued in years 1 and 2. How should the company report the error?" The financial statements for years 1 and 2 should not be restated; the cumulative effect of the error on years 1 and 2 should be reflected in the carrying amounts of assets and liabilities as...
Cullumber Company reports the following information: Correction of understatement of depreciation expense in prior years, net of tax $ 1280000 Dividends declared 969000 Net income 2889000 Retained earnings, 1/1/17, as reported 6070000 Cullumber should report retained earnings, 12/31/17, at A)$4790000. B)$6710000. C)$7990000. D)$9270000.
Dooman Corporation reports the following information: Correction of understatement of depreciation expense in prior years, net of tax $ 645 Dividends declared 480 Net Income 1,500 Retained earnings, 1/1/17, as reported 3,000 Dooman should report retained earning, 12/31/17, at Select one: a. $4,020 O b. $3,375. C. $4,665 d. $2,355
Exercise 5-2 Error correction (LO5-2) Bettner, Inc., is a calendar-year corporation whose financial statements for 20X0 and 20X1 included errors as follows: Year Ending Inventory Depreciation Expense 20X0 $ 12,000 overstated $ 22,300 overstated 20X1 8,000 understated 6,000 understated Assume that inventory purchases were recorded correctly and that no correcting entries were made at December 31, 20X0, or December 31, 20X1. The errors were discovered in 20X2, after the 20X1 financial statements were issued. Required: Ignoring income taxes, prepare the...
A prior period adjustment for understatement of net income will show as a gain on the current year's Income Statement. be debited to the Retained Earnings account. show as an asset on the current year's Balance Sheet. be credited to the Retained Earnings account.
The following information is available from the current period financial statements: Net income $125,740 Depreciation expense 22,204 Increase in accounts receivable 14,186 Decrease in accounts payable 15,492 The net cash flow from operating activities using the indirect method is a. $177,622 b. $125,740 c. $73,858 d. $118,266
is Question: 5 pts 10 16 CM Fate May Bakery, Inc. reported a prior period adjustment in 2018. An accounting error caused net income of prior years to be overstated by $10,000. Retired Earnings at December 31, 2017, as previously reported, was $30.000. Met income 2018 was 578,000, and dividends declared were $22,000. Prepare the company's statement of retained earnings for the year ended December 31, 2018 Enter any current period increases in retained earnings prior to the total and...