acct 253 ch 22

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  1. A change that occurs as the result of new information or as additional experience is acquired is a
    A. change in accounting principle
    B. change in reporting entity
    C. change in accounting estimate
    D. correction of an error
    C. change in accounting estimate
    (this multiple choice question has been scrambled)
  2. All of the following are examples of a change in accounting principle except a change from
    A. expensing certain expenditures that were immaterial to deferring and amortizing them because they have become material
    B. FIFO to average cost
    C. the completed contract to percentage of completion method of accounting for construction contracts
    D. average cost to LIFO inventory pricing
    A. expensing certain expenditures that were immaterial to deferring and amortizing them because they have become material
    (this multiple choice question has been scrambled)
  3. A switch from the cash basis of accounting to the accrual basis is considered a
    A. correction of an error
    B. change in accounting principle
    C. change in reporting entity
    D. change in accounting estimate
    A. correction of an error
    (this multiple choice question has been scrambled)
  4. Changes in accounting principle are generally accounting for
    A. retrospectively
    B. consistently
    C. prospectively
    D. currently
    A. retrospectively
    (this multiple choice question has been scrambled)
  5. The cumulative effect of a change in accounting principle is reported
    A. on the retained earnings statement as an adjustment to the beginning balance of the current year
    B. on the income statement as an extraordinary item
    C. on the income statement as part of discountinued operations
    D. on the retained earnings statement as an adjustment to the beginning balance on the earliest year presented
    D. on the retained earnings statement as an adjustment to the beginning balance on the earliest year presented
    (this multiple choice question has been scrambled)
  6. All of the following situations require the restatement of prior period financial statements except a change
    A. in the method of accounting for long-term construction contracts
    B. all of the options require restatement
    C. to the LIFO inventory method from another method
    D. to or from the full cost method of accounting in the extractive industries
    C. to the LIFO inventory method from another method
    (this multiple choice question has been scrambled)
  7. Corrections of errors from prior periods are reported
    A. as an adjustment to the current year's beginning retained earnings
    B. as an adjustment of beginning retained earnings of the earliest year presented
    C. between extraordinary items and net income on the income statement
    D. as an extraordinary item
    A. as an adjustment to the current year's beginning retained earnings
    (this multiple choice question has been scrambled)
  8. The cumulative effect of an accounting change is not computed for a change
    A. to the percentage of completion method from the completed contract method
    B. to the LIFO method from the FIFO method
    C. from the LIFO method to the FIFO method
    D. all of the options require computation of the cumulative effect of the change
    B. to the LIFO method from the FIFO method
    (this multiple choice question has been scrambled)
  9. Changes in estimates must be accounted for
    A. prospectively
    B. retrospectively
    C. currently
    D. consistently
    A. prospectively
    (this multiple choice question has been scrambled)
  10. Which of the following statements related to changes in estimates is not correct?
    A. opening balances are not adjusted for the change
    B. these changes are viewed as normal recurring corrections and adjustments
    C. pro forma amounts for prior periods are reported
    D. financial statements of prior periods are not restated
    C. pro forma amounts for prior periods are reported
    (this multiple choice question has been scrambled)
  11. A change in reporting entity is accounted for
    A. propsectively
    B. currently
    C. consistently
    D. retrospectively
    D. retrospectively
    (this multiple choice question has been scrambled)
  12. All of the following are examples of accounting errors except a
    A. all of the options are accounting errors
    B. change from an unacceptable accounting principle to an acceptable accounting principle
    C. change in estimate that occurs due to a clearly unrealistic original estimate
    D. misuse of facts
    A. all of the options are accounting errors
    (this multiple choice question has been scrambled)
  13. Corrections of error must be accounted for
    A. prospectively
    B. currently
    C. as prior period adjustments
    D. by showing pro forma data
    C. as prior period adjustments
    (this multiple choice question has been scrambled)
  14. Which of the following is not a reason why companies prefer certain accounting methods?
    A. bonus payments
    B. political costs
    C. asset structure
    D. smooth earnings
    C. asset structure
    (this multiple choice question has been scrambled)
  15. All of the following involve counterbalancing errors except the
    A. overstatement of purchases
    B. failure to record prepaid expenses
    C. understatement of ending inventory
    D. failure to record depreciation
    D. failure to record depreciation
    (this multiple choice question has been scrambled)
  16. Accounting changes are often made and the monetary impact is reflected in the financial statements of a company even though, in theory, this may be a violation of the accounting concept of
    A. consistency
    B. materiality
    C. conversatism
    D. objectivity
    A. consistency
    (this multiple choice question has been scrambled)
  17. Which of the following is not treated as a change in accounting principle?
    A. a change to a different method of depreciation for plant assets
    B. a change from LIFO to FIFO for inventory valuation
    C. a change from completed contract to precentage of completion
    D. an change from full cost to successful efforts in the extractive industry
    A. a change to a different method of depreciation for plant assets
    (this multiple choice question has been scrambled)
  18. Which of the following is not a retrospective type accounting change?
    A. LIFO method to the FIFO method for invetnroy valuation
    B. full cost method to another method in the extractive industry
    C. completed contract method to the percentage of completion method for long term contracts
    D. sum of the years digits method to the straight line method
    D. sum of the years digits method to the straight line method
    (this multiple choice question has been scrambled)
  19. Which of he following is accounted for as a change in accounting principle?
    A. a change in inventory valuation from average cost to FIFO
    B. a chane from expensing immaterial expenditures to deferring and amortizing them as they become material
    C. a change from the cash basis of accounting to the accrual basis of accounting
    D. a change in the estimated useful life of plant assets
    A. a change in inventory valuation from average cost to FIFO
    (this multiple choice question has been scrambled)
  20. Which of the following disclosures is required for a change from sum of years digits to straight line?
    A. re-computation of current and future years' depreciation
    B. all of these are required
    C. restatement of prior years' income statements
    D. the cumulative effect on prior years, net of tax, in the current retained earnings statement
    A. re-computation of current and future years' depreciation
    (this multiple choice question has been scrambled)
  21. A company changes from percentage of completion to completed contract, which is the method used for tax purposes. The entry to record this change should include a
    A. debit to Loss on Long term Contracts in the amount of the difference on prior years, net of tax
    B. debit to Construction in Process
    C. debit to Retained Earnings in the amount of the difference on prior years, net of tax
    D. credit to Deferred Tax Liability
    C. debit to Retained Earnings in the amount of the difference on prior years, net of tax
    (this multiple choice question has been scrambled)
  22. Which of te following disclosures is required for a change from LIFO to FIFO?
    A. all of these are required
    B. the justification for the change
    C. the cumulative effect on prior years, net of tax, in the current retained earnings statement
    D. restated prior year income statements
    A. all of these are required
    (this multiple choice question has been scrambled)
  23. Stone Company changed its method of pricing inventories from FIFO to LIFO. What type of accounting change does this represent?
    a. a change in accounting estimate for which the financial statements for prior periods included for comparative purposes should be presented as previously reported
    b. a change in accounting principle for which the financial statements for prior periods included for comparative purposes should be presented as previously reported
    c. a change in accounting estimate for which the financial statements for prior period included for compatative purposes should be restated
    d. a change in accounting principle for which the financial statements for prior periods included for comaprative purposes should be restated
    • b. a change in accounting principle for which the financial statements
    • for prior periods included for comparative purposes should be presented
    • as previously reported
  24. Which type of accounting change should always be accounted for in current and future periods?
    A. correction of an error
    B. change in accounting estimate
    C. change in reporting entity
    D. change in accounting principle
    B. change in accounting estimate
    (this multiple choice question has been scrambled)
  25. Which of the following is (are) the proper time period(s) to record the effects of a change in accounting estimate?
    A. current period and retrospectively
    B. current period and prospectively
    C. retrospectively only
    D. current period only
    B. current period and prospectively
    (this multiple choice question has been scrambled)
  26. When a company decides to switch from the double-declining balance method to the straight line method, this change should be handled as a
    A. correction of an error
    B. change in accounting estimate
    C. change in accounting principle
    D. prior period adjustment
    B. change in accounting estimate
    (this multiple choice question has been scrambled)
  27. The estimated life of a building that has been depreciated 30 years of an originally estimated life of 50 years has been revised to a remaining life of 10 years. Based on this information, the accountant should
    A. continue to depreciate the building over the original 50 year life
    B. adjust accumulated depreciation to its appropriate balance through retained earnings, based on a 40 year life, and then depreciate the adjusted book value as though the estimated life had always been 40 years
    C. depreciate the remaining book value over the remaining life of the asset
    D. adjust accumulated depreciation to its appropriate balance, through net income, based on a 40 year life, and then depreciate the adjusted book value as thought the estimated life had always been 40 years
    C. depreciate the remaining book value over the remaining life of the asset
    (this multiple choice question has been scrambled)
  28. Which of the following statements is correct?
    a. changes in accounting principle are always handled in current or prospective period
    b. prior statements should be restated for changes in accounting estimates
    c. a change from expensing certain costs to capitalizing these costs due to a change in the period benefited, should be handled as a change in accounting estimate
    d. correction of an error related to prior period should be considered as an adjustment to current year net income
    • c. a change from expensing certain costs to capitalizing these costs due
    • to a change in the period benefited, should be handled as a change in
    • accounting estimate
  29. Which of the following describes a change in reporting entity?
    A. a company divests itself of a European branch sales office
    B. a manufacturing company expands its market from regional to nationwide
    C. changing the companies included in combined financial statements
    D. a compnay acquires a subsidiary that is to be accounted for as a purchase
    C. changing the companies included in combined financial statements
    (this multiple choice question has been scrambled)
  30. An example of a correction of an error in previously issued financial statements is a change
    A. from the FIFO method to inventory valuation to the LIFO method
    B. in the tax assessment related to a prior period
    C. in the service life of plant assets, based on changes in the economic environment
    D. from the cash basis of accounting to the accrual basis of accounting
    D. from the cash basis of accounting to the accrual basis of accounting
    (this multiple choice question has been scrambled)
Author:
wsrdpc
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Card Set:
acct 253 ch 22
Updated:
2010-09-02 00:46:04
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acct 253 ch 22
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