ACCOUNTING CHANGES AND ERROR ANALYSIS

TRUE-FALSe—Conceptual

Answer No. Description F 1. Change in accounting estimate. T 2. Errors in financial statements. F 3. Adoption of a new principle. T 4. Retrospective application of accounting principle. F 5. Reporting cumulative effect of change in principle. T 6. Disclosure requirements for a change in principle. T 7. Indirect effect of an accounting change. T 8. Retrospective application impracticality. F 9. Reporting changes in accounting estimates. T 10. Change in principle vs. change in estimate. F 11. Accounting for change in depreciation method. F 12. Accounting for change in reporting entities. T 13. Example of a change in reporting entities. F 14. Accounting error vs. change in estimate. T 15. Accounting for corrections of errors. T 16. New principle created by FASB standard. F 17. Balance sheet errors. F 18. Definition of counterbalancing errors. T 19. Accounting for counterbalancing errors. T 20. Correcting entries for noncounterbalancing errors.

Multiple Choice—Conceptual

Answer No. Description b 21. Accounting changes and consistency concept. b 22. Identify changes in accounting principle. c 23. Identify a non-retrospective change. d 24. Identify a change in accounting principle. a 25. Entry to record a change in depreciation methods. c 26. Disclosures required for a change in depreciation methods. c 27. Change from percentage-of-completion to completed-contracts. d 28. Disclosures required for a change from LIFO to FIFO. b 29. Change from FIFO to LIFO. c 30. Change in accounting estimate. a 31. Change in accounting estimate. b 32. Identify a change in accounting estimate. b 33. Change in accounting estimate. c 34. Identify a change in accounting estimate. d 35. Identify a change in reporting entity. c 36. Retroactive reporting a change in reporting entity. c 37. Identify a correction of an error. b 38. Identification of counterbalancing errors.

Multiple Choice—Conceptual (cont.)

Answer No. Description c 39. Impact of failure to record purchase and count ending inventory. c 40. Impact of failure to record purchase and count ending inventory.

Multiple Choice—Computational

Answer No. Description b 41. Calculate cumulative effect of a change in depreciation method. b 42. Calculate cumulative effect of a change in depreciation method. c 43. Calculate net income with change in accounting principle with tax effects. d 44. Calculate cumulative effect of accounting change. c 45. Calculate depreciation expense after change in accounting principle. d 46. Calculate cumulative effect of a change on retained earnings. b 47. Calculate cumulative effect of a change on retained earnings. c 48. Compute depreciation expense after a change in depreciation methods. b 49. Calculate cumulative effect of a change in inventory methods. c 50. Calculate net income after a change to LIFO method. a 51. Calculate net income with change from FIFO to LIFO. b 52. Calculate depreciation after a change in estimate. a 53. Calculate net income with change in an accounting estimate. a 54. Determine depreciation expense after a change in estimated life. a 55. Compute effect of errors on income before taxes. c 56. Compute effect of errors on retained earnings. d 57. Calculate effect of errors on net income. c 58. Calculate effect of errors on working capital. c 59. Calculate effect of errors on retained earnings. a 60. Effect of errors on income and retained earnings. a 61. Calculate effect of errors on net income. b 62. Calculate effect of errors on retained earnings. c 63. Calculate effect of errors on working capital. d 64. Determine cumulative effect of error on income statement. c 65. Determine the understatement of retained earnings. a 66. Calculate effect of error on net income. c 67. Compute effect of error on retained earnings.…