Prospective adjustments are expected toO produce no impact on the financial statements of previous years.O impact financial statements of only previous years.O impact financial statements of previous years and current years as if the accounting principle had always been used.O impact the financial statements of the current year only.

Prospective adjustments refer to all those adjustments that will be made from the date the changes…

Answered: act on the financial statements of…

act on the financial statements of previous years. Istatements of only previous years. 1 statements of previous years and current years as if the accou

Principles of Accounting Volume 1

19th Edition

ISBN:9781947172685

Author:OpenStax

Publisher:OpenStax

Chapter14: Corporation Accounting

Section: Chapter Questions

Problem 18MC: Corrections of errors that occurred on a previous periods financial statements are called ________....

See similar textbooks

Related questions

Q: What is the annual report, and what two types of information doesit present?

A: Annual report is the report of a company’s performance to its stake holders.

Q: Prepare the company’s Statement of Profit or Loss for the year ended 31 March 20X3, in a form…

A: Given to us is the trial balance and additional information for C L Worcester Ltd who provides…

Q: а. Record the appropriate journal entry on December 31, 20X1. b. Where on the financial statements…

A: Mark to market accounting is made to ensure that the financial statement consists of true amounts.…

Q: Changes in accounting estimates are: A. Reported in past periods only. B. Reported as prior period…

A: Accounting estimates- Not defined by IAS 8 Adjustment of a carrying amount Periodic consumption Not…

Q: Explain the need for using coterminous year ends and uniform accounting policies in preparing…

A: The question is related to IFRS 10 Consolidated Financial Statements. The coterminous year means…

Q: for IFRS, there is required financial statements to be presented at the end of the accounting…

A: The question is related to Financial statements amd ita components to be disclosed by IFRS.

Q: he amount o

A: Retained earnings: The retained earnings contain the net income that is retained after distributing…

Q: The financial statement that contains the balances of the assets, liabilities, and owner’s equity as…

A: Financial Statements comprises of Balance Sheet, Statement of Profit and Loss, etc. These are used…

Q: In ABC's December 31, year 1 consolidated balance sheet, what amount should be reported as total…

A: Acquisition accounting is a part of accounting that contains certain guidelines regarding how the…

Q: 6. Required State whether each item is reported: 1. in the statement of financial position 2. in…

A: Financial statements are statements prepared at the end of accounting period in order to analyse and…

Q: Identify the 4 financial statements of a business and the time period each statement covers. What…

A: A financial statement is a set of structured statements that contain all the financial information…

Q: nual reports and why ar

A: To explain the items of annual report as,

Q: a. What was the correct amount of unrestricted net assets at the end of Year 2? b. What was the…

A: Financial Statement: A financial statement is the complete record of financial transactions that…

Q: Are transactions recorded on a fiscal‐year basis or a calendar‐year basis? Does it have to be one or…

A: Fiscal year is a 12 months period, which normally starts from Apr 1 to Mar 31 of next year. Calendar…

Q: 2. The following statements are correct about notes in the financial statements, except: Issues…

A: Financial statements are statements that are prepared at the end of accounting period in order to…

Q: If an accrued expense is not recorded at the end of the year, what is the impact on the financial…

A: Adjusting entries:An adjusting entry is prepared when the trial balance is not up-to-date, and…

Q: The balance sheet reports the final balances of the permanent accounts at the end of the fiscal…

A: The balance sheet is s an essential part of financial statements. It contains all the assets,…

Q: TRUE or FALSE An entity can begin its operation in a calendar year or fiscal year.

A: The calendar year starts on January 1 and ends on December 31. but the fiscal year is a time period…

Q: The following statement An entity presents on a net basis gains and losses arising from a group of…

A: Answer is POINT 'C'

Q: Instructions (a) Prepare the entries, if any, on each of the three dates that involved dividends.…

Q: How is the year-end balance of the NCI in Net Income (NCINI) account calculated? A) NCI% of S's…

A: NCI refers to non-controlling interest example if the parent company acquire 90% of shares then the…

Q: Entities should disclose all of the following in interim financial report, except: a. Basic and…

A: Earlier period blunders are oversights from, and misquotes in, the substance's budget summaries for…

Q: How should consolidated financial statements be reportedthis year when statements of individual…

A: Consolidated financial statements: When the company presents its financial statements along with the…

Q: Indicate how prior period adjustments should be reported on the financial statements presented only…

A: Prior Period Adjustments Prior period adjustments refer to the error that is caused due to any…

Q: An entity uses a calnedar period for is financial reporting. Its current financial statements are…

A: As per PFRS 10, Events after the reporting period are those events, that occur between the end of…

Q: S1: Financial statements must be prepared by a publicly-listed entity at least semiannually. S2: An…

A: The financial statements are prepared by an entity in order to show the financial performance and…

Q: A prior period adjustment ahould be reflected, net of applicable income taxes, in the financial…

A: Prior period adjustments: These are the items of adjustments arising in the current period due to…

Q: The following may be presented as current assets, except * A. Advances to shareholders, directors,…

A: Current assets: These include all the assets of the business that can be converted into cash within…

Q: true or false according to PAS 1, PFRS apply to financial statements as well as to other…

A: Accounting principles are general rules and guidelines that the company follows while recording and…

Q: Which financial statement reports the balances in the permanent accounts (assets, liabilities;…

A: Permanent accounts are company accounts whose balances are carried over from one accounting period…

Q: Notes receivable due in 390 days appear on the a.balance sheet in the current liabilities section…

A: Introduction: Balance sheet: All Assets and liabilities are shown in Balance sheet. It tells the net…

Q: Midway traders is owned by Mr k.Rabada. his accountant, Mr V philander prepared the statement of…

A: Financial Management: Financial management comprises of two words i.e. Finance and management.…

Q: Where financial statements for a single year are being presented, a prior period error recognized in…

A: Financial statements are a collection of summary-level reports about an organization's financial…

Q: nancial year stating up to.......

A: The financial year is the period during which money is earned. Salaried professionals and senior…

Q: Which of the following increases the current assets of a business entity? A) Consumable inventory…

A: Current assets are those assets in the business entity which are either in cash or can be converted…

Q: Analyze the interrelationships among the four financial statements and enter the missing…

A: Income statement shows revenue earned less the expenses incurred by a business over a period of…

Q: $100,000 $200,000 Expenses Net income…

A: Given Entity A and Entity B are separate entities, and both use a calendar-year accounting period.…

Q: An entity provided the following information for the current year:

A: Correct answer is 1,300,000 Employee benefit expense = Current service cost + Past service cost +…

Q: Differential fiscal year from calendar year. In contrast with cash basis accounting, what is accrual…

A: Solution:- Calendar year means"- A calendar year is a one-year period . In other words calendar year…

Q: 22. Unearned income is recorded by an entity that A. Pay money in advance before performance of…

A: Since you have asked multiple question, we will solve the first question for you. If you want any…

Q: For a publicly owned company, indicate which of the fol-lowing accounting activities are likely to…

A: Publicly owned companies: Publicly owned companies are those companies whose shares are listed on a…

Q: "Choose from the following list of terms and phrases to best complete the statements below. Fiscal…

A: Accounting principles and concepts lays down the foundation of accounting and helps in understanding…

Q: Choose the best accounting treatment for each of the following items. Change from straight-line to…

A: The change in accounting is either changed prospectively or retrospectively. Prospectively means…

Q: The balance of this account shows the net income or net loss for the period before it is closed to…

A: Solution: Balance of income summary account shows the net income or net loss for the period before…

Q: Generally accepted methods of accounting for a change in accounting principle include O including…

A: Generally accepted methods of accounting for a change in accounting principle include "Restating…

Question

Prospective adjustments are expected to
O produce no impact on the financial statements of previous years.
O impact financial statements of only previous years.
O impact financial statements of previous years and current years as if the accounting principle had always been used.
O impact the financial statements of the current year only.

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

SEE SOLUTION Check out a sample Q&A here

Step 1

VIEW

Step 2

VIEW

Step by step

Solved in 2 steps

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.

Similar questions

Which of the following statements regarding accounting change is correct? a. Change in depreciation method is accounted for as a change in accounting policy. b. Change in accounting estimate is accounted for in current and future periods. c. The categories of accounting changes are change in accounting estimate and correction of prior period error. d. A switch from the direct write-off method to the allowance method of accounting for bad debts is an example of change in accounting policy.
If the income statement error is discovered in a subsequent accounting period, what action is to be done by the entity? Group of answer choices a. Reclassify the item to its proper nominal account and restate the income statement of the prior year affected by the error. b. Restate the income statement of the prior year affected by the error. c. No reclassifying entry is necessary but restate the income statement of the prior year affected by the error. d. Reclassify the item to its proper nominal account. Recording of next year's sales as sales of the current year will Group of answer choices a. overstate net income of next year b. not affect retained earnings at the end of next year c. understate retained earnings at the end of the current year d. understate net income of the current year
Which statement concerning accounting for accounting changes and errors is not true? a. An error is accounted for retroactively b. A change in accounting principle is accounted for prospectively c. A change in accounting principle may be accounted for retroactively d. A change in accounting estimate is accounted for prospectively
Which of the following statements about a change in accounting estimate is not true? A. A change in accounting estimate can only be made when it is required to comply with an accounting standard or interpretation. B. Changes in accounting estimates result from new information or new developments. C. The effects of a change in accounting estimate should be applied prospectively. D. A change in estimate is an adjustment of the carrying amount of an asset or a liability, or the amount of the periodic consumption of an asset.
Changes in accounting principles generally are reported as Group of answer choices A.adjustments to current period statements only. B.adjustments to current and/or prior period statements. C.extraordinary items. D.adjustments to prior period statements.
Prospective application of recognizing the effect of a change in an accounting estimate means A. correcting the recognition, measurement and disclosure of amounts of elements of financial statements as if a prior period error had never occured B. recognizing the effect of the change in the accounting estimate in the current and future periods affected by the change C. applying a new accounting policy to transactions other events and conditions as if the policy had always been applied D. Any of the choices
If the income statement error is discovered in the year of error, what action is to be done by the entity? a. Reclassify the item to its proper nominal account. b. Reclassify the item to real account. c. Adjust the effect to the retained earnings account. d. Ignore the error.
The Accountant for the a Company forgot to make an adjusting entry to record depreciation for the current year. The effect of this error would be: a An overstatement of net income and an understatement of assets. b An overstatement of assets offset by an understatement of owners' equity. c An overstatement of assets, net income, and owners' equity. d An overstatement of assets and of net income and an understatement of owners' equity.
Which of the following types of errors will not self-correct in the next year? Accrued expenses not recognized at year-end Accrued revenues that have not been collected not recognized at year-end Depreciation expense overstated for the year Prepaid expenses not recognized at vear-end
Which of the following statements is incorrect? A. Adjustments to prepaid expenses and unearned revenues involve previously recorded assets and liabilities. B. Accrued expenses and accrued revenues involve assets and liabilities that had not previously been recorded. C. Adjusting entries can be used to record both accrued expenses and accrued revenues. D. Prepaid expenses, depreciation, and unearned revenues often require adjusting entries to record the effects of the passage of time. E.Adj usting entries affect only balance sheet accounts.
Which of the following statements is incorrect? A. Adjustments to prepaid expenses and unearned revenues involve previously recorded assets and liabilities. B. Accrued expenses and accrued revenues involve assets and liabilities that had not previously been recorded. C. Adjusting entries can be used to record both accrued expenses and accrued revenues. D. Prepaid expenses, depreciation, and unearned revenues often require adjusting entries to record the effects of the passage of time.
Which of the following is NOT an accounting method that would increase the current ratio (currently 2:1)? a. Not adjusting prepaid insurance at year end b. Recognising unearned revenue as revenue c. Not recognising accrued wages d. Changing the method of depreciation