Accounting Changes and Error Analysis

Topics: FIFO and LIFO accounting, Depreciation, Inventory Pages: 48 (12497 words) Published: June 23, 2013
CHAPTER 22

CHAPTER 22
ACCOUNTING CHANGES AND ERROR ANALYSIS
TRUE-FALSE—Conceptual
Answer
F T F T F T T T F T F F T F T T F F T T

No.
1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13. 14. 15. 16. 17. 18. 19. 20.

Description
Change in accounting estimate. Errors in financial statements. Adoption of a new principle. Retrospective application of accounting principle. Reporting cumulative effect of change in principle. Disclosure requirements for a change in principle. Indirect effect of an accounting change. Retrospective application impracticality. Reporting changes in accounting estimates. Change in principle vs. change in estimate. Accounting for change in depreciation method. Accounting for change in reporting entities. Example of a change in reporting entities. Accounting error vs. change in estimate. Accounting for corrections of errors. New principle created by FASB standard. Balance sheet errors. Definition of counterbalancing errors. Accounting for counterbalancing errors. Correcting entries for noncounterbalancing errors.

MULTIPLE CHOICE—Conceptual
Answer
b b
c

No.

Description

d a c
c

21. Accounting changes and consistency concept. 22. Identify changes in accounting principle. 23. Identify a non-retrospective change. 24. Identify a change in accounting principle. 25. Entry to record a change in depreciation methods. 26. Disclosures required for a change in depreciation methods. 27. Change from percentage-of-completion to completed-contracts.

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CHAPTER 22

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d b
c

a b b
c

d c c b

28. Disclosures required for a change from LIFO to FIFO. 29. Change from FIFO to LIFO. 30. Change in accounting estimate. 31. Change in accounting estimate. 32. Identify a change in accounting estimate. 33. Change in accounting estimate. 34. Identify a change in accounting estimate. 35. Identify a change in reporting entity. 36. Retroactive reporting a change in reporting entity. 37. Identify a correction of an error. 38. Identification of counterbalancing errors.

22 - 2 Test Bank for Intermediate Accounting, Fourteenth Edition

MULTIPLE CHOICE—Conceptual (cont.)
Answer
c c

No.
39. 40.

Description
Impact of failure to record purchase and count ending inventory. Impact of failure to record purchase and count ending inventory.

MULTIPLE CHOICE—Computational
Answer
b b c d c d b c b c a b a a a c d c c a a b c d c a c

No.

Description

41. Calculate cumulative effect of a change in depreciation method. 42. Calculate cumulative effect of a change in depreciation method. 43. Calculate net income with change in accounting principle with tax effects. 44. Calculate cumulative effect of accounting change. 45. Calculate depreciation expense after change in accounting principle. 46. Calculate cumulative effect of a change on retained earnings. 47. Calculate cumulative effect of a change on retained earnings. 48. Compute depreciation expense after a change in depreciation methods. 49. Calculate cumulative effect of a change in inventory methods. 50. Calculate net income after a change to LIFO method. 51. Calculate net income with change from FIFO to LIFO. 52. Calculate depreciation after a change in estimate. 53. Calculate net income with change in an accounting estimate. 54. Determine depreciation expense after a change in estimated life. 55. Compute effect of errors on income before taxes. 56. Compute effect of errors on retained earnings. 57. Calculate effect of errors on net income. 58. Calculate effect of errors on working capital. 59. Calculate effect of errors on retained earnings. 60. Effect of errors on income and retained earnings. 61. Calculate effect of errors on net income. 62. Calculate effect of errors on retained earnings. 63. Calculate effect of errors on working capital. 64. Determine cumulative effect of error on income statement. 65. Determine the understatement...
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