Which of the following types of errors will not self-correct in the next year?
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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
Prepaid expenses not recognized at vear-end
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- The Effect of Ignoring Adjusting Entries on Net Income For each of the following independent situations, determine whether the effect of ignoring the required adjusting entry will result in an understatement (U), will result in an overstatement (O), or will have no effect (NE) on net income for the period.Corrections of errors that occurred on a previous periods financial statements are called ________. A. restrictions B. deficits C. prior period adjustments D. restatementsWhich of the following is not a counterbalancing error? Non-recognition of the unused portion of office supplies at year end. Omission of accrued interest expense at year end. Non-recording at year end of rent already earned but uncollected. Overstatement of depreciation for the current year.
- What is the effect of omission of accrued expenses in assets at the end of the year of error? Group of answer choices a. No effect b. Cannot be determined from the given information c. Overstated d. UnderstatedWhat is the effect of omission of accrued expenses in assets at the end of the year of error? a. Understated b. No effect c. Overstated d. Cannot be determined from the given informationWhat is the effect of omission of accrued income in assets at the end of the year of error? a. Understated b. Overstated c. Cannot be determined from the given information d. NO effect
- Which of the following misstatements is not related to the completeness assertion for current year revenue? о Multiple Choice O Goods are shipped, but revenue is not recorded. This year's revenue is recorded next year. Next year's revenue is recorded this year. Revenue is not recognized for services that have been performed.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 yearChoose the correct. How should material seasonal variations in revenue be reflected in interim financial statements?a. The seasonal nature should be disclosed, and the interim report should be supplemented with a report on the 12-month period ended at the interim date for both the current and preceding years.b. The seasonal nature should be disclosed, but no attempt should be made to reflect the effect of past seasonality on financial statements.c. The seasonal nature should be reflected by providing pro forma financial statements for the current interim period.d. No attempt should be made to reflect seasonality in interim financial statements.
- Which of the following would appear as a prior period adjustment? Group of answer choices a correction in the calculation of earnings per share of a prior period a material difference between the actual and estimated uncollectible accounts receivable a material loss resulting from the sale of fixed assets which were acquired in a prior period material error in the computation of depreciation expense in the Year 1 that was discovered and corrected in the Year 3How should material seasonal variations in revenue be reflected in interim financial statements?a. The seasonal nature should be disclosed, and the interim report should be supplemented with a report on the 12-month period ended at the interim date for both the current and preceding years.b. The seasonal nature should be disclosed, but no attempt should be made to reflect the effect of past seasonality on financial statements.c. The seasonal nature should be reflected by providing pro forma financial statements for the current interim period.d. No attempt should be made to reflect seasonality in interim financial statements.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.
