Bellingham Inc

question 101

Multiple Choice

Bellingham Inc. discovered in early 2014 that it had overstated depreciation expense reported on its 2013 income statement. How would this correction of an error be handled?

• A) Adjust depreciation expense for the error in 2014.
• B) No adjustment needed.
• C) Deduct the amount from 2014 net income.
• D) Adjust the beginning of the year balance in the December 31, 2014 retained earnings statement.

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Definitions:

Common Shares Issued

Refers to the number of shares that have been allocated to shareholders as part of a company's capital stock.

Market Price

The current price at which a particular security, commodity, or asset can be bought or sold on the market.

Comprehensive Income

The total change in equity for a reporting period, including all revenues, gains, expenses, and losses.

Net Income

The profit a company has after all expenses, taxes, and costs have been subtracted from total revenue.