Question

15.Which of the following will NOT lead to a prior period adjustment:

Multiple Choice

• Correction of an error in the ending inventory from last year.

• Correction of an error in insurance expense from last year.

• Correction of an error in depreciation expense from last year.

• Correction of an error in recording a long-term asset as a current asset from last year.

4.Which of the following is not one of the approaches for reporting accounting changes?

Multiple Choice

• The prospective approach.

• All of these answer choices are approaches for reporting accounting changes.

• The modified retrospective approach.

• The retrospective approach.

8.Which of the following differences between financial accounting and tax accounting ordinarily creates a deferred tax liability?

Multiple Choice

• All of these answer choices are correct.

• Accrual of estimated operating expenses.

• Prepaid operating expenses, currently deductible.

• Subscriptions collected in advance.

Answer 1

15. Which of the following will NOT lead to a prior period adjustment:

Correction of an error in recording a long-term asset as a current asset from last year.

Because it is not an income statement item. It is a balance sheet item. It will not affect retained earnings balance.

4. Which of the following is not one of the approaches for reporting accounting changes

All of these answer choices are approaches for reporting accounting changes.

8. Which of the following differences between financial accounting and tax accounting ordinarily creates a deferred tax liability?

All of these answer choices are correct.