A transaction that is unusual, but not infrequent, should be reported separately as a(an):
While preparing its 1991 financial statements, Dek Corp. discovered computational errors in its 1990 and
1 989 depreciation expense. These errors resulted in overstatement of each year's income by $25,000,
net of income taxes. The following amounts were reported in the previously issued financial statements:
Dek's 1991 net income is correctly reported at $180,000. Which of the following amounts should be
reported as prior period adjustments and net income in Dek's 1991 and 1990 comparative financial
statements?
On January 2, 1993, Quo, Inc. hired Reed to be its controller. During the year, Reed, working closely with
Quo's president and outside accountants, made changes in accounting policies, corrected several errors
dating from 1992 and before, and instituted new accounting policies.
Quo's 1993 financial statements will be presented in comparative form with its 1992 financial statements.
This question represents one of Quo's transactions. List A represents possible clarifications of these
transactions as: a change in accounting principle, a change in accounting estimate, a correction of an
error in previously presented financial statements, or neither an accounting change nor an accounting
error.
Item to Be Answered
Quo changed from FIFO to average cost to account for its raw materials and work in process inventories.
List A (Select one)
Which of the following facts concerning fixed assets should be included in the summary of significant
accounting policies?
Earnings per share data should be reported on the income statement for:
