Principles of Financial Accounting, Chapters 1-17 - With Access (Looseleaf)
22nd Edition
ISBN: 9781259582394
Author: Wild
Publisher: MCG
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Question
Chapter 3, Problem 1MCQ
To determine
Identify the effect of not recording the
Expert Solution & Answer
Answer to Problem 1MCQ
Option (b) Overstate net income by $350,000 is the correct answer.
Explanation of Solution
Option (a): If the Company forgot to record the accrued and unpaid wages of $350,000 will over-state the net income. Hence, Option (a) Understate net income by $350,000 is not the correct answer.
Option (b): If the Company forgot to record the accrued and unpaid wages of $350,000 will over-state the net income. Hence, Option (b) over-state the net income by $350,000 is the correct answer.
Option (c): If the Company forgot to record the accrued and unpaid wages of $350,000 will over-state the net income. Hence, Option (c) Overstate assets by $350,000 are not the correct answer.
Option (d): If the Company forgot to record the accrued and unpaid wages of $350,000 will over-state the net income. Hence, Option (d) Understate assets by $350,000 are not the correct answer.
Conclusion
As per the above explanation, Option (b) Overstate net income by $350,000 is the correct answer.
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Students have asked these similar questions
4) Accrued taxes payable of $150,000 were not recorded at December 31, 2020. Office supplies on hand of $95,000 at December 31, 2021 were erroneously treated as expense instead of supplies inventory. Neither of these errors was discovered nor corrected. The effect of these two errors would cause retained earnings at December 31, 2021 to be in error by what amount?
On October 12 of the current year, a company determined that a customer's account receivable was uncollectible and that the account should be written off. Assuming the direct write-off method is used to account for bad debts, what effect will this write-off have on the company's net income and total assets? Mutiple Choice
Decrease in net income; no effect on total assets.
No effect on net income; no effect on total assets.
Decrease in net income; decrease in total assets.
Increase in net income; no effect on total assets.
No effect on net income; decrease in total assets
Clock Company showed the following errors in their account during December 31, 2021:
Dividends of P 100,000 had been declared but was not recorded on December 10, 2021.
Buildings and equipment maintenance for P 480,000 had been debited to expense at the end of April 2020. It had an estimated life of 8 years.
The company failed to record sales commissions payable amounting to P 10,500 and P 19,000 at the end of 2020 and 2021, respectively.
Supplies on hand amounting to P 6,000 and P 15,000 were not recognized at the end of 2020 and 2021, respectively.
What is the net effect of the error in the 2021 net income?
a.P 59,500 over
b.P 72,200 under
c.P 75,000 over
d.P 70,000 over
Chapter 3 Solutions
Principles of Financial Accounting, Chapters 1-17 - With Access (Looseleaf)
Ch. 3 - Prob. 1MCQCh. 3 - Prob. 2MCQCh. 3 - Prob. 3MCQCh. 3 - Prob. 4MCQCh. 3 - Prob. 5MCQCh. 3 - What is the difference between the cash basis and...Ch. 3 - Prob. 2DQCh. 3 - What type of business is most likely to select a...Ch. 3 - What is a prepaid expense and where is it reported...Ch. 3 - What type of assets requires adjusting entries to...
Ch. 3 - What contra account is used when recording and...Ch. 3 - Prob. 8DQCh. 3 - If a company initially records prepaid expenses...Ch. 3 - Prob. 10DQCh. 3 - Prob. 11DQCh. 3 - Samsung Assume Samsung has unearned revenue. What...Ch. 3 - Prob. 12DQCh. 3 - Prob. 1QSCh. 3 - Prob. 2QSCh. 3 - Identifying accounting adjustments Classify the...Ch. 3 - Prob. 4QSCh. 3 - Prepaid (deferred) expenses adjustments For each...Ch. 3 - Prob. 6QSCh. 3 - Prob. 7QSCh. 3 - Prob. 8QSCh. 3 - Prob. 9QSCh. 3 - Prob. 10QSCh. 3 - Prob. 11QSCh. 3 - Accrued expenses adjustments For each separate...Ch. 3 - Prob. 13QSCh. 3 - Accrued revenues adjustments For each separate...Ch. 3 - Prob. 15QSCh. 3 - Prob. 16QSCh. 3 - Prob. 17QSCh. 3 - Prob. 18QSCh. 3 - Prob. 19QSCh. 3 - Prob. 20QSCh. 3 - Prob. 1ECh. 3 - Classifying adjusting entries P1 P2 P3 P4 In the...Ch. 3 - Prob. 3ECh. 3 - Question: Determining cost flows through accounts...Ch. 3 - Prob. 5ECh. 3 - Prob. 6ECh. 3 - Prob. 7ECh. 3 - Analyzing and preparing adjusting entries P5...Ch. 3 - Prob. 9ECh. 3 - Prob. 10ECh. 3 - Prob. 11ECh. 3 - Prob. 12ECh. 3 - Prob. 1APCh. 3 - Prob. 2APCh. 3 - Prob. 3APCh. 3 - Prob. 4APCh. 3 - Prob. 5APCh. 3 - Prob. 6APCh. 3 - Prob. 1BPCh. 3 - Prob. 2BPCh. 3 - Prob. 3BPCh. 3 - Prob. 4BPCh. 3 - Prob. 5BPCh. 3 - Prob. 6BPCh. 3 - Prob. 3SPCh. 3 - Prob. 1BTNCh. 3 - Prob. 2BTNCh. 3 - Prob. 5BTNCh. 3 - Prob. 7BTNCh. 3 - Prob. 9BTN
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