An Example of the Correction of an Error in Previously

question 23

Multiple Choice

An example of the correction of an error in previously issued financial statements is a change

• A) From the completed contract to the percentage-of-completion method of accounting for long-term construction-type contracts.
• B) In the depletion rate, based on new engineering studies of recoverable mineral resources.
• C) From the sum-of-years-digits to the straight-line method of depreciation for all plant assets.
• D) From the installment basis of recording sales to the accrual basis, when collection of the sales price has been and continues to be reasonably assured

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Definitions:

Supplies Expense

Costs associated with consumable items or supplies used in the operation of a business during a specific period.

Accrued Expense

Expenses that have been incurred but not yet paid, recognized in accounting even if no cash has been exchanged.

Property Taxes

Taxes levied by local governments on real estate owned by individuals and businesses based on the assessed value of the property.

Annual

Relating to a period of one year.