Acct 557 week 5 quiz
ACCT 557 Intermediate Accounting III
(DeVry – Winter 2016)
Date Taken: ………../2016
Question Type: # Of Questions:
Multiple Choice 5
Question 1.Question : (TCO E) Which of the following is not a retrospective-type accounting
Question 2.Question : (TCO E) What type of accounting change/correction should always be
accounted for in the current and future accounting periods?
Question 3.Question : (TCO E) On December 31, 2013, Gifts Galore, Inc. appropriately changed
its inventory valuation method from weighted-average cost to FIFO
method for financial statement and income tax purposes. The change will
result in a $1,800,000 increase in the beginning inventory at January 1,
2013. Assume a 40% income tax rate. The cumulative effect of this
accounting change on beginning retained earnings is
Question 4.Question : (TCO E) As of January 1, 2011, Survival Industries, Inc. purchased a boat
at a cost of $490,000.
When purchased, the company was using the double declining
Key info on the asset at time of purchase is the following.
Estimated useful life is 7 years.
Residual Value is $0.
At the beginning of 2014, the CFO decided to change to straight-line
Compute the depreciation expense for 2014
Question 5.Question : (TCO E) Mystical Corporation found the following errors in their year-end
As of Dec. 2012 As of
Ending Inventory $32,000
understated $46,000 overstated
Depreciation Exp. $7,000 understated
On December 31, 2013, a fully depreciated machine was sold for $35,000
but the sale was not recorded until January 15, 2014 when the cash was
received. In 2012, a three-year insurance premium was prepaid for
$45,000 of which the entire amount was expensed in the first year.
There were no other errors or corrections. Ignore any tax considerations.
What is the total net effect of errors on Mystical’s 2013 Retained