If suspense account does not balance off even after rectification of errors it implies that:(a) There are some one sided errors only in the books yet to be located.(b) There are no more errors yet to be located.(c) There are some two sided errors only yet to be located.(d) There may be both one sided errors and two sided errors yet to be located.

If suspense account does not balance off even after rectification of errors it implies that:(a) There are some one sided errors only in the books yet to be located.(b) There are no more errors yet to be located.(c) There are some two sided errors only yet to be located.(d) There may be both one sided errors and two sided errors yet to be located.

College Accounting, Chapters 1-27

23rd Edition

ISBN:9781337794756

Author:HEINTZ, James A.

Publisher:HEINTZ, James A.

Chapter4: Journalizing And Posting Transactions

Section: Chapter Questions

Problem 1CP: CHALLENGE PROBLEM Journal entries and a trial balance for Fred Phaler Consulting follow. As you will...

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What is a suspense account? Is it necessary that is suspense account will balance off after rectification of the errors detected by the accountant? If not, then what happens to the balance still remaining in suspense account?
If an error is not detected in spite of all efforts and trial balance does not agree then what measure will be taken for the agreement of a trial balance? Should opened a rectification account Should opened an error account Should opened a compensation account Should opened a suspense account
Explain why the ledger can still contain errors even through the trial balance is in balance. Give examples of two such types of errors
The ruling method can be used if an error is discovered before or after an entry was posted. A line is drawn through the incorrect account title or amount and the correct account title or amount written immediately above. The person making the correction also includes his or her initials with the correction. The correcting entry method is used if an error is discovered after an incorrectly journalized entry was posted. If the error consists of the wrong account(s), an entry is made to cancel out or reverse the incorrect account(s) and insert the correct account(s). The correcting entry must include an explanation. On May 10, a $170 payment for Advertising Expense was incorrectly journalized and posted as a debit to Travel Expense for $170 and a credit to cash for $170. Provide the correcting entry following the one-step method.
Which of the following is not a characteristic of non-counterbalancing error? Group of answer choices a.If the net income of one year is understated due to non-counterbalancing error, the net income of subsequent year is also affected. b.The statement of financial position of the year of non-counterbalancing error and succeeding statement of financial position are incorrect until the error is corrected. c.If not detected, this is not automatically corrected in the next accounting period. d.The income statement of the period in which the non-counterbalancing error is committed is misstated.
Give an example of an error or fraud that would misstate financial statements to affect the accounts as follows, taking each case independently. (Note: “Overstate” means the account has a higher value than would be appropriate under GAAP and “understate” means it has a lower value.)a. Overstate one asset; understate another asset.b. Overstate an asset; overstate stockholders’ equity.c. Overstate an asset; overstate revenue.d. Overstate an asset; understate an expense.e. Overstate a liability; overstate an expense.f. Understate an asset; overstate an expense.g. Understate a liability; understate an expense.
Counter balancing error is sometimes referred to as: which of the following? a Compensating errors b Trial balance errors c Self-correcting error -d An error of principle
Explain why the ledger can still contain errors even though the trial balance is in balance.
Which of the following is false? a. GAAP and IFRS have the same absolute standard regarding the reporting of error corrections in previously issued financial statements. b. The accounting for changes in estimates is similar between GAAP and IFRS. c. Under IFRS, the impracticability exception applies both to changes in accounting principles and to the correction of errors. d. GAAP has detailed guidance on the accounting and reporting of indirect effects; IFRS does not.
Which of the following is not a characteristic of non-counterbalancing error? a. If not detected, this is not automatically corrected in the next accounting period. b. The income statement of the period in which the non-counterbalancing error is committed is misstated. c. The statement of financial position of the year of non-counterbalancing error and succeeding statement of financial position are incorrect until the error is corrected. d. If the net income of one year is understated due to non-counterbalancing error, the net income of subsequent year is also affected.
A material weakness is a situation in whicha. It is probable that an immaterial financial statement misstatement would not be detectedon a timely basis.b. There is a remote likelihood that a material misstatement would be detected on a timely basis.c. It is reasonably possible that a material misstatement would not be detected on a timelybasis.d. It is reasonably possible that an immaterial misstatement would not be detected on atimely basis.
What is risk of incorrect acceptance? A. The risk that the auditor concludes that a material misstatement exists when it does not exist. B. The risk that the auditor concludes that a material misstatement does not exist when it actually does not. C. The risk that the auditor concludes that a material misstatement does not exist when it does exist. D. The risk that the auditor concludes that a material misstatement exists when it actually does.