The accountant for the Nu-2-U company did not have time to count the inventory of Supplies at year-end and did not prepare the adjusting entry to record supplies used during the year. As a result Group of answer choices A. assets and stockholders’ equity would be overstated. B. liabilities and stockholders’ equity would be overstated. C. assets and stockholders’ equity would be understated. D. net income and stockholders’ equity would be understated.

The accountant for the Nu-2-U company did not have time to count the inventory of Supplies at year-end and did not prepare the adjusting entry to record supplies used during the year. As a result Group of answer choices A. assets and stockholders’ equity would be overstated. B. liabilities and stockholders’ equity would be overstated. C. assets and stockholders’ equity would be understated. D. net income and stockholders’ equity would be understated.

Intermediate Accounting: Reporting And Analysis

3rd Edition

ISBN:9781337788281

Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Chapter22: Accounting For Changes And Errors.

Section: Chapter Questions

Problem 10P: At the beginning of 2020, Tanham Company discovered the following errors made in the preceding 2...

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At the beginning of 2020, Tanham Company discovered the following errors made in the preceding 2 years: Reported net income was 27,000 in 2018 and 35,000 in 2019. The allowance for doubtful accounts had a zero balance at the beginning of 2018. No accounts were written off during 2018 or 2019. Ignore income taxes. Required: 1. What is the correct net income for 2018 and 2019? 2. Prepare the adjusting journal entry in 2020 to correct the errors.
The accountant for We Fly Cheap Airlines forgot to make an adjusting entry at the end of the year to record the portion of unearned revenues that were earned before year-end. What effect did this omission have on the company’s financial statements? Group of answer choices A. Overstated assets and stockholders’ equity. B. Understated assets and stockholders’ equity. C. Understated liabilities and overstated stockholders’ equity. D. Overstated liabilities and understated stockholders’ equity.
The accountant for We Deliver, Inc. forgot to make an adjusting entry at the end of the year to record the salaries owed to employees for working the last week of the year. What effect did this omission have on the company's financial statements? Group of answer choices A. Overstated assets and retained earnings. B. Understated assets and retained earnings. C. Overstated liabilities and understated retained earnings. D. Understated liabilities and overstated retained earnings.
The accountant of Newton Legal Services failed to make an adjusting entry for supplies that had been used for the year. Assume the supplies were initially recorded as an asset. Which of the following statements is true? A. The total assets will be understated. B. The total assets will be overstated. C. The equity will be understated. D. The total liabilities will be overstated.
The accountant of Reliable Consulting, Inc. failed to make an adjusting entry to record $6,000 for unearned service revenues that were earned before the end of the fiscal year. Assume the company initially recorded a liability. Which of the following statements is true? A. The total liabilities will be overstated. B. The total liabilities will be understated. C. The total assets will be overstated. D. The total assets will be understated.
For each of the following situations, identify whether a change in accounting estimate, change in accounting policy, or an accounting error has occurred. Also indicate whether the change or correction should be made prospectively or retrospectively. The accounting clerk did not record a shipment of product on the last day of the previous fiscal year, because the customer had not yet paid for the product. The shipment was made FOB shipping point. In the past, Uni-Focus Company used the cash basis of accounting. This year, the Company is changing to the accrual basis of accounting. Tri-Facet Ltd follows ASPE. Management of Tri-Facet decided to switch from using the taxes payable method to using the future income tax method.
When adjusting entries were made at the end of the year, the accountant for Parker Company did not make the following adjustments. Required: Identify the effect on the financial statements of the adjusting entries that were omitted. a. Wages of $2,900 had been earned by employees but were unpaid.This error will understate expenses and understate liabilities. b. $3,750 of performance obligations had been satisfied but no cash was uncollected nor any revenue recorded. c. $2,400 performance obligations had been satisfied. The customer had prepaid for this service and the amount was originally recorded in the Unearned Sales Revenue account.This error will understate revenues and overstate liabilities. d. $1,200 of insurance coverage had expired. Insurance had been initially recorded in the Prepaid Insurance account.
The night manager of Willis Transportation Service, who had no accounting background, prepared the following balance sheet for the company at February 28, current year. The dollar amounts were taken directly from the company’s accounting records and are correct. However, the balance sheet contains a number of errors in its headings, format, and the classification of assets, liabilities, and owners’ equity. NOT: retained earnings = net profit, capital stock = capital WILLIS TRANSPORTATION SERVICEManager’s Report8 P.M. Thursday Assets Owners' Equity Capital stock $ 93,000 Accounts receivable $ 70,000 Retained Earnings 63,000 Notes payable 283,000 Cash 77,000 Supplies 15,000 Building 100,000 Land 71,000 Automobiles 165,000 Accounts payable 59,000 $ 498,000 $ 498,000 Prepare a corrected balance sheet. WILLIS TRANSPORTATION SERVICE Assets Liabilities & Owners' Equity Liabilities:…
The accountant for Healthy Life Company, a medical services consulting firm, mistakenly omitted adjusting entries for (a) unearned revenue earned during the year ($21,820) and (b) accrued wages ($6,770). Indicate the effect of each error, considered individually, on the income statement for the current year ended July 31. Also indicate the effect of each error on the July 31 balance sheet. Enter all amounts as positive numbers. Enter "0" in those spaces where there is no overstatement or no understatement. Error (a) The adjusting entry for unearned revenue earned during the year ($21,820) was omitted.
The accountant for UpandAway Airlines forgot to make an adjusting entry at the end of the year to record the depreciation on the airplanes. What effect did this omission have on the company’s financial statements? Group of answer choices A. Overstated assets and stockholders’ equity. B. Understated assets and stockholders’ equity. C. Understated liabilities and overstated stockholders’ equity. D. Overstated liabilities and understated stockholders’ equity.
Determine the excess of revenues over expenses for November? Can you think of any reason why the amount determined in (4) might not be the net income for November? A. Because the closing inventory balance is missing. B. Because the dividends are declared but not paid. C. Because necessary adjustment to expenses, like depreciation has not been made. D. Because the cash balance is incorrect.
The night manager of Çiğli Transportation Service, who had no accounting background, prepared the following balance sheet for the company at February 28, 2011. The dollar amounts were taken directly from the company’s accounting records and are correct. However, the balance sheet con- tains a number of errors in its headings, format, and the classification of assets, liabilities, and owners’ equity.