Exam 22: Accounting Corrections and Error Analysis

Under the indirect method,which of the following would be subtracted from net income when determining net cash flows from operations? A)gain on the sale or a used truck B)amortization expense C)decrease in prepaid rent D)increase in salaries payable

Make the journal entry to correct the errors using the proper date.

Which one of the following would not be a required disclosure for a change in accounting principle?

Compare and contrast the differences between accounting for leases under GAAP and IFRS.

At the end of 2015,the payroll supervisor for Claro,Inc.failed to accrue $24,790 in commissions for the outside salespersons.The cost was recorded in 2016 when the commissions were paid and Commissions Expenses was debited and Cash credited for the full amount.The error was not discovered until late in 2016 while reconciling year-end expenses for 2016.What is the proper treatment to correct the error? (Ignore income taxes.)

Initial direct costs are expensed at the inception of the lease in ________. A)an operating lease B)a direct financing lease C)a sales-type lease D)a capital lease

Companies account for guaranteed residual values in the same way they account for bargain purchase options.

An increase in a deferred tax liability is deducted from the accrual-basis tax expense to arrive at cash paid for income taxes.

Both U.S.GAAP and IFRS require a reconciliation of net income to net cash provided by operations.

The "bottom line" of the cash flow statement is Net Increase (Decrease)in Cash and Cash Equivalents.

Firms account for material error corrections ________.

Refer to Superbyte Corporation. What is the net book value of the lease liability in Laguna Madre's balance sheet on June 30 of the current year? A)$13,222,518 B)$13,883,146 C)$14,900,749 D)$14,301,177

When a large corporation purchases a new business which is included in consolidated statements for the year,it is not a change in a reporting entity,and it is handled prospectively.

What types of accounts are typically affected by investing cash flows?

The three classifications of cash flows are reporting,investing,and financing.

Changes in non-current liabilities relate to financing activities.

Swanson Corporation is leasing a machine from Gray,Inc.Swanson's incremental borrowing rate is 13%.The prime rate of interest is currently 7%.Gray's implicit rate in the lease is 9%; Swanson does not know this rate.At what interest rate should the minimum lease payments be computed?

Highland Corporation has always used declining-balance depreciation for its equipment.Beginning in 2016,the company has decided to use straight-line depreciation for all new equipment purchases.How should the company report this decision? Describe any journal entries and disclosures that need to be made for this change.

Vieta,Inc.'s CFO discovered a program error in its inventory program in early 2018,when she was making year-end adjustments to the financial statements for 2017.The errors began in 2015.Below is a summary of the sales and cost of goods sold on income statement items for the three years: Upon further analysis,the CFO determined that each of the years had ending inventory errors.The correct amounts for the years were: 2015,$231,000; 2016,$350,000; and 2017,$474,000.The amounts for 2015 beginning inventory and all purchases are correct as stated. Required:

Retrospective changes require all but which of the following?