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Flashcards in 9B Error Correction Deck (29):
0

Accounting errors are errors in...

Recognition, measurement, presentation or disclosure in the
financial statements

1

An error can occur from...3 things

1 mathematical mistakes

2 mistakes in applying GAAP

3 oversight of facts that existed when financial statements were
Prepared

2

A change in accounting principle from non-GAAP to GAAP is...

A correction of an error

3

An error in financial statements is treated as a...

Prior period adjustment by restating prior period financial
Statements

4

The cumulative effect of the error is reflected in the carrying value of assets and liabilities at the beginning of the first period presented, with an offsetting adjustment to...

The opening balance in retained earnings for that period

5

Inventory errors have an impact on both...

The balance sheet and income statement

6

Inventory errors:

A misstatement of ending inventory balance is followed by a...

2) an inventory error could also be a...

Misstatement of the beginning balance for the next period

2) misstatement of purchases for the period

7

Under IFRS, accounting for error correction is similar to...

US GAAP

8

Under IFRS, a prior period error includes...3

1 arithmetic mistakes
2 mistakes in applying accounting policies
3 mistakes in recognition, measurement, presentation or
Disclosure on financial statements

9

IFRS requires the entity to correct the error by...

Restating the comparative amounts for prior periods

10

Under IFRS, if the error occurred before the earliest period presented, then the opening balances of assets, liabilities and equity should be...

Restated for the earliest period presented

11

Under IFRS, similar to GAAP, if it is impracticable to determine the periodic effects of the error, comparative information is...

Restated from the earliest date practicable

12

Dealing with errors from 1 period mead they aren't...

Counter balancing errors

13

What 3 methods of depreciation is salvage value subtracted?

1 straight line
2 sum of years digits
3 units of production

14

What depreciation method does not subtract salvage value?

Declining balance

15

When beginning inventory is understated, COS is...

2) When ending inventory is understated, COS is...

Understated

2) overstated

16

What happens to counterbalancing errors in the next period?

they automatically correct in the next period

17

Correction of an error affects...

Beginning retained earnings

18

Correction of errors on financial statements are corrected...

Net of tax

19

Correction journal entries are recorded at...

Gross amount (not net of tax)

20

A change in accounting principle is a change from...

One generally accepted principle to another generally accepted principle

21

A change from an unacceptable principle to a generally accepted one is...

A correction of an error

22

Cash basis is an...

Unacceptable accounting principle

23

If inventory is understated by $10,000 in the company's year 1 financial statements how should it be adjusted?

Restate the financial statements with corrected balances
For all periods presented

24

If inventory is understated by $10,000 in the company's year 1 financial statements: beginning inventory may be adjusted, however...

Prior years financial statements must also be restated

25

Accrued liabilities of costs (special insurance costs) that relate to work in process, does not affect...

2) special insurance costs related to goods that were sold would have caused...

Net income of retained earnings

2) COGS to be understated, causing net income and retained
Earnings to be overstated

26

The classification of holiday pay expense for administrative employees as manufacturing overhead would result in the capitalization of some or all of these costs as a component of...

Ending inventory (overstating a current asset)

27

Overstating ending inventory, understates...

COGS, which overstates net income and stockholder's equity

28

The misclassification of the Noncurrent note receivable principal as a current asset would have...

No impact on stockholders equity