FINANCIAL ACCOUNTING
10th Edition
ISBN: 9781259964947
Author: Libby
Publisher: MCG
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9. A change in accounting principle requires that the cumulative effect of the change for prior periods be shown as an adjustment to:
a. beginning retained earnings of the earliest period presented.
b. net income of the period in which the change occurred.
c. comprehensive income for the earliest period presented.
d.
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- The financial statement that reports the changes in the retained earnings and common stock for a period of time is known as thearrow_forwardThe effect of a revision of an accounting estimate must be recognised in profit and loss in which reporting periods? In the present, prior (by adjusting retained earnings) and future periods affected. In the present and future periods affected. In the present and prior reporting periods (by adjusting retained earnings). Not recognised in any period.arrow_forwardItems directly affecting Retained Earnings include all of the following Except Choices; Non-Current asset held for sale Prior period errors and Effect of change in accounting policy. Dividends declared Appropriation of retained earningsarrow_forward
- please explain your answer and please do not copy from other sourcesarrow_forwardWhat is the effect of omission of prepaid expense in net income during the year of error? a. Overstated b. Cannot be determined based on the given information c. Understated d. No Effectarrow_forwardA change in accounting policy requires that the cumulative effect of change for prior periods should be reported as an adjustment to: a. Beginning retained earnings for the earliest period presented b. Net income for the period in which the change occurred c. Comprehensive income for the earliest period presented d. Shareholders’ equity for the period in which the change occurredarrow_forward
- A statement of retained earnings is used to explaind the change in the amount of retained earnings between two successive balance sheet dates. True ir false?arrow_forwardChoose the best accounting treatment for each of the following items. Change from straight-line to sum of the year's digits depreciation A. Change in reporting entity reported prospectively B. Change in estimate reported prospectively Change from adjusting the valuation allowance for deferred tax assets Change from individual to consolidated financial C. Correction of an error reported prospectively statement Change as a result of a failure to record depreciation in a prior period Change from cash basis to accrual basis of D. Change in accounting principle reported retrospectively E. Change in accounting principle reported prospectively accounting Change from completed contract to percent of F. Correction of an error reported retrospectively completion Change from FIFO to LIFO method for inventory G. Change in estimate reported retrospectively valuation Change in the realizability of accounts receivable H. Change in reporting entity reported retrospectivelyarrow_forwardi Scenarios - a. Company A increases the allowance for doubtful accounts (ADA). Using the old estimate, ADA would have been $40,000. The new estimate is $45,000. X b. Company B omitted to record an invoice for a(n) $8,000 sale made on credit at the end of the previous year and incorrectly recorded the sale in the current year. The related inventory sold has been accounted for. c. Company C changes its revenue recognition to a more conservative policy. The result is a decrease in prior-year revenue by $3,000 and a decrease in current-year revenue by $4,000 relative to the amounts under the old policy.arrow_forward
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