Module 9b

Question 1

What are the 2 types of errors?

Answer 1

Reclassifications which are period errors, and Counterbalancing, which ware errors in 1 period which correct in another period

Question 2

T/F is an error in the financial statements treated as a prior period adjustment by restating the prior period financial statements?

Answer 2

TRUE

Question 3

T/F the cumulative effect of the error is reflected in the carrying value of assets and liabilities at the beginning of the first period presented with an offsetting adjustment to Retained Earnings?

Answer 3

TRUE

Question 4

T/F Financial statements for each period should be adjusted to reflect the correction of a period specific error, after the carrying value was adjusted

Answer 4

TRUE

Question 5

Should an error have footnotes that disclose the that the financial statements were restated, along with a description of the error?

Answer 5

Yes

Question 6

IF beginning inventory is understated, what is COGS?

Answer 6

Understated

Question 7

If ending inventory is understated, what is COGS

Answer 7

Overstated

Question 8

IFRS for Errors states that?

Answer 8

the entity must correct the error by restating the comparative amounts for all prior periods presented.