I. Using the following table, indicate the effect of the following errors of omission on the financialstatement classifications listed. If as a result of the omission a classification is overstated, place a (+) inthe appropriate space. An understatement is to be indicated by a (-). If the omission has no effect onthe classification, place a (0) in the appropriate cell. .a. Payment for repairs erroneously debited to Building account.b. Recorded collection of an account receivable by debiting Cash and creditingrevenueасcount.c. Depreciation for the month was omitted.d. Recorded twice an acquisition of office equipment on account.e. Rendered services for cash but made no record of the transaction.Effect of OmissionClassificationab.eRevenuesExpensesTotal AssetsTotal LiabilitiesOwner's Equity

Name: I. Using the following table, indicate the effect of the following er
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Description: I. Using the following table, indicate the effect of the following errors of omission on the financialstatement classifications listed. If as a result of the omission a classification is overstated, place a (+) inthe appropriate space. An understate

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roneously debited to Building of an account receivable by nonth was omitted. quisition of office equipment or r cash but made no record of th

Auditing: A Risk Based-Approach (MindTap Course List)

11th Edition

ISBN:9781337619455

Author:Karla M Johnstone, Audrey A. Gramling, Larry E. Rittenberg

Publisher:Karla M Johnstone, Audrey A. Gramling, Larry E. Rittenberg

Chapter11: Auditing Inventory, Goods And Services, And Accounts Payable: The Acquisition And Payment Cycle

Section: Chapter Questions

Problem 7CYBK

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Which of the following statements is not correct regarding combined statement of financial position errors and income statement errors? a. It does not affect net income. b. It results to misstatement of the statement of financial position. c. It can be classified as counterbalancing errors and non-counterbalancing errors. d. It affects both real and nominal accounts.
Which of the following would not overstate current-period net income?a. Capitalizing an expenditure that should be expensed.b. Failing to record a liability as an expense.c. Failing to record a check paying an item in Vouchers Payable.d. All of the above would overstate net income.
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.
Which of the following is a limitation of the direct write-off method of accounting for uncollectibles? a. The direct write-off method overstates assets on the balance sheet. b. The direct write-off method does not match expenses against revenue very well. c. The direct write-off method does not set up an allowance for uncollectibles. d. All of the above
Which of the following statements is most likely to be correct? Bad debts recovered account, if having an income tax benefit, is transferred to profit or loss summary account. A trial balance establishes the arithmetical accuracy of the accounting records. A well-maintained asset need not be depreciated. Drawing of goods by the owner should be debited to profit or loss summary account.
Which of the following is the incorrect effect of counterbalancing errors?a. None of the statements is incorrect. b. The statement of financial position at the end of the first period is incorrect. c. The income statements for three successive periods are incorrect. d. The statements of financial position at the end of the second period is correct.
Which of the following best describes the proper presentation of accounts receivable in the financial statements?a. Accounts Receivable plus the Allowance for DoubtfulAccounts in the asset section of the balance sheet.b. Accounts Receivable in the asset section of the balancesheet and the Allowance for Doubtful Accounts in theexpense section of the income statement.c. Accounts Receivable less Bad Debt Expense in theasset section of the balance sheet.d. Accounts Receivable less the Allowance for DoubtfulAccounts in the asset section of the balance sheet.
If the amount of bad debts is significant, use of the direct write-off method increases the usefulness of both the income statement and statement of financial position. Select one: True False
Which of the following should be treated as a change in accountingpolicy? A. A change is made in the method of calculating the provision for uncollectible accounts receivable B. A change from cost model to fair value model in measuring investment property C. An entity engaging in construction contract for the first time needs on accounting policy to deal with this D. All of the choices qualify as a change in accounting policy
Which of the following is a limitation of the direct write-off method of accounting for uncollectible? The direct write-off method overstates assets on the balance sheet. The direct write-off method does not match expenses against revenue very well. The direct write-off method does not set up an allowance for uncollectible. All of the above
Indicate by a (+), (), or (0) whether each of the following events would most likely cause accounts receivable (AR), sales, and profits to increase, decrease, or be affected in an indeterminate manner:
Which of the following would be included in the financing section? A. loss on sale of investments B. depreciation expense C. increase in notes receivable D. decrease in notes payable