Dr. Filemon C. Aguilar Memorial College of Las piass

BSA 101

Multiple choice (AICPA Adapted)

1)If it is impracticable to determine the cumulative effect of an accounting change to any of the prior periods, the accounting change should be accounted for

1. 1. As a prior period adjustment.
   2. On a prospective basis.
   3. As a cumulative effect change on the income statement.
   4. As an adjustment to retained earnings.
2. Where it is impracticable to determine the period-specific effect of the change on comparative information for one or more prior periods presented, the retrospective application or restatement is applied
   1. Retrospectively only to the extent that it is practicable
   2. Prospectively only to the extent it is practicable
   3. Retrospectively to the extent that estimates can be made
   4. Prospectively to the extent that estimates can be made
3. Applying a requirement of a Standard or an Interpretation is impracticable when the entity cannot apply it after making every effort to do so. Which of the following is not included in the definition of impracticable?
   1. The effect of the retrospective application is not determinable.
   2. The retrospective application requires assumptions about what management intention would have been at the time.
   3. The retrospective application requires significant estimate.
   4. The entity would find the determination of the effect to be immaterial.
4. Prior period errors
   1. Do not include the effect of a mistake in the application of accounting policy.
   2. Do not affect the presentation of prior period comparative financial statements.
   3. Do not require further disclosure.
   4. Are reflected as adjustment of the opening balance of retained earnings of the earliest period presente
5. An example of a correction of an error in previously issued financial statements is a change
   1. From FIF0 method of inventory valuation to the average method.
   2. In the service life of property, plant and equipment.
   3. From cash basis to accrual basis of accounting.
   4. In the tax assessment related to a prior perio

6. An entity that changed from cash basis to accrual basis of accounting during the current year should report
   1. Prior period adjustment resulting from the correction of an error.
   2. Prior period adjustment resulting from the change in accounting policy.
   3. Component of income from continuing operations.
   4. Component of income from discontinued operations.
7. A change from an accounting principle that is not generally accepted to one that is generally accepted should be reported as
   1. Component of income from continuing operations
   2. Component of discontinued operations
   3. An adjustment of retained earnings
   4. Component of other comprehensive income
8. During the current year, an entity discovered that ending inventory reported in the financial statements for the prior year was understated. How should the entity account for this understatement?
   1. Adjust the beginning inventory in the prior year.
   2. Restate the financial statements with corrected balances for all periods presented.
   3. Adjust the ending balance in retained earnings at current year-end.
   4. Make no entry because the error will self-correct
9. On March 15, 2020, the entity discovered that depreciation expense for 2019 was overstated. The 2019 financial statements were authorized for issue on April 1, 2020. What must the entity do?
   1. Correct the 2019 financial statements before issuing them.
   2. Reduce depreciation for 2020.
   3. Restate the depreciation expense reported for 2019 in the comparative figures of the 2020 financial statements.
   4. Do nothing.
10. On April 1, 2020, the entity discovered that depreciation expense for 2019 was overstated. The 2019 financial statements were authorized for issue on March 15, 2020. What must the entity do?
    1. Reissue the 2019 financial statements with the correct depreciation expense.
    2. Reduce depreciation for 2020.
    3. Restate the depreciation expense reported for 2019 in the comparative figures of the 2020 financial statements.
    4. Do nothing.
11. A change in reporting entity is actually a change in
    1. Accounting policy
    2. Accounting estimate
    3. Accounting method
    4. Accounting concept
12. Which is not a change in reporting entity?
    1. Changing the entities in combined financial statements
    2. Disposition of a subsidiary or other business unit
    3. Presenting consolidated statements in place of the separate financial statements of individual entities
    4. Changing specific subsidiaries that constitute the group for which consolidated financial statements are presente
13. What is the proper accounting treatment for a change in reporting entity?
    1. Restatement of financial statements of all prior periods presented