NSU COMBO F/INTERM.ACCTG-CONNECT ACCESS
10th Edition
ISBN: 9781266020193
Author: SPICELAND
Publisher: MCG
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Chapter 20, Problem 20.14Q
If it is discovered that an extraordinary repair in the previous year was incorrectly debited to repair expense, how will
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If it is discovered that an extraordinary repair in the previous year was incorrectly debited to repair expense, how will retained earnings be reported in the current year’s statement of shareholders’ equity?
If the statement of financial position error is discovered in the year of error, what action is to be done by the entity?
Ignore the
Reclassify the item to its proper real account.
Adjust the effect to the retained earnings account.
Reclassify the item to nominal account.
Why should the beginning retained earnings be adjusted for prior period errors and effects of change in accounting policy?
Chapter 20 Solutions
NSU COMBO F/INTERM.ACCTG-CONNECT ACCESS
Ch. 20 - Prob. 20.1QCh. 20 - There are three basic accounting approaches to...Ch. 20 - Prob. 20.3QCh. 20 - Lynch Corporation changes from the...Ch. 20 - Sugarbaker Designs Inc. changed from the FIFO...Ch. 20 - Most changes in accounting principles are recorded...Ch. 20 - Southeast Steel, Inc., changed from the FIFO...Ch. 20 - Prob. 20.8QCh. 20 - Its not easy sometimes to distinguish between a...Ch. 20 - For financial reporting, a reporting entity can be...
Ch. 20 - Prob. 20.11QCh. 20 - Describe the process of correcting an error when...Ch. 20 - Prob. 20.13QCh. 20 - If it is discovered that an extraordinary repair...Ch. 20 - Prob. 20.15QCh. 20 - Prob. 20.5ECh. 20 - FASB codification research LO202 Access the FASB...Ch. 20 - Classifying accounting changes LO201 through...Ch. 20 - Classifying accounting changes and errors LO201...Ch. 20 - Prob. 20.3DMPCh. 20 - Analysis Case 204 Change in inventory methods;...Ch. 20 - Prob. 20.11DMP
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- f. What is the effect of these errors on Net Income, Earnings per Share, Total Liabilities and Retained Earnings if they are not discovered (detected) before the publication of the annual report? tarrow_forwardIf 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 yeararrow_forwardUsing IFRS, how should prior period errors that are discovered in a subsequent reporting period be recognized in the financial statements? a. As an adjustment to beginning retained earnings for the reporting period in which the error was discovered. b. As a note in the financial statements that the error was previously made but has since been corrected. c. In the current period if it’s not considered practicable to report it retrospectively. d. In the statement of comprehensive income.arrow_forward
- If the statement of financial position error is discovered in a subsequent accounting period, what action is to be done by the entity? A. Reclassify the item to its proper real account but do not restate the statement of financial position of the prior year affected by the error. B. Reclassify the item to its proper real account. C. Restate the statement of financial position of the prior year affected by the error. D. Reclassify the item to its proper real account and restate the statement of financial position of the prior year affected by the errorarrow_forwardWhen a change in accounting principle is made during the year, the cumulative effect on retained earnings is determined: a. during the year using the weighted average method b. as of the date of the change c. as of the beginning of the year in which the change is made d. as of the end of the year in which the change is madearrow_forward1.Provide an argument explaining why expenses that were inadvertently omitted in a previous year should be debited directly to retained earnings in the following period in which the error is discovered, rather than recognising them in the profit or loss in the period when the error was discovered.arrow_forward
- Can I ask for a solution to this problem? In good accounting form. Thank you. What amount should be reported as unappropriated retained earnings at year-end?arrow_forwardWhich 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.arrow_forwardIf 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.arrow_forward
- What is the effect of omission of prepaid expense in retained earnings at the end of year 2?arrow_forwardWhich of the following is not correct relative to an appropriation of Retained Earnings? a. Retained earnings set aside for a special or specific purpose.b. Undistributed funds for dividends declared during the year.c. Reduction in the amount available to shareholders as dividendsd. Total retained earnings remains unchanged.arrow_forwardWhere financial statements for a single year are being presented, a prior period error recognized in the current year ordinarily would a. Affect net income of the current year. b. Be shown as an adjustment of the affected component of equity at the start of the current year. c. Be included in the statement of recognized gains and losses. d. Be shown as an extraordinary item on the current year's financial statement of comprehensive income.arrow_forward
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