Acctng 3021

1. Which of the following is not a change in accounting principle? - a change

from eight years to five years in the useful life of a depreciable asset

2. Which of the following changes in accounting principle does not require

the retrospective approach? - change of inventory method from FIFO
to LIFO

3. Which of the following concepts or principles relates most directly to

reporting accounting changes and errors? - consistency

4. At the time Eckland Co. became a subsidiary of Acme Co. Eckland

switched depreciation of its plant assets from the straight-line method to
the sum-of-the-years'-digits method used by Acme. With respect to
Eckland, this change was a: - change in accounting principle

5. Which of the following should be reported as a change in accounting

estimate? - Increase in the net credit sales rate from 1 percent to 1-
1/2 percent in determining losses from uncollectible receivables

6. Which of the following is the proper time period in which to record a

change in accounting estimate? - current period and future periods

7. The correction of an error in the financial statements of a prior period

should be reflected, net of applicable income taxes, in the current: -
retained earnings statement as an adjustment of the opening
balance

8. Dakota Enterprises purchased a machine on 1/2/12, at a cost of 120,000.

An additional 50,000 was spent for installation, but this amount was
charged erroneously to repairs expense. The machine has a useful life of
5 years and a salvage of 20,000. As a result of the error: - retained
earnings as 12/31/13, was understand by 30,000 and 2013 income
was overstated by 10,000

9. Which of the following types of errors will not self-correct in the next year?
-depreciation expense overstated for the year

10. Which of the following accounting treatments is proper for a change in

reporting entity? - restatement of all financial statements presented

11. Which of the following is not a change in reporting entity? - a company

acquires a subsidiary that is to be accounted for a purchase

12. Which of the following does not represent a change in reporting entity? -
disposition of a subsidiary or other business unit

13. Which of the following is not correct regarding a change in reporting entity?
-the change on net income before extraordinary items and EPS
 should be reported for current and subsequent periods to the
change

14. Which of the following is not a justification for a change in depreciation

methods? - to conform to the depreciation method prevalent in a
particular industry

15. Border Co. decided to change its depreciation policy by (1) changing
from double-declining-balance depreciation, and (2) changing the
estimated useful life on a all automobiles used used in the business from
five years to four years. Which of the following is correct concerning these
two changes? - One is a change in estimate effected through a
change in accounting principle, and one is a change in estimate.

16. For a company with a periodic inventory system, which of the following
would cause income to be overstated in the period of occurrence? -
understating beginning inventory

17. Which of the following would cause income of the current period to be
understated? - understating estimates of asset residual values