A Company Made an Error in Calculating and Reporting Amortization

question 147

Multiple Choice

A company made an error in calculating and reporting amortization expense in 2015.The error was discovered in 2016.The item should be reported as a prior period adjustment:

• A)on the 2015 statement of retained earnings.
• B)on the 2015 income statement.
• C)on the 2016 statement of retained earnings.
• D)on the 2016 income statement.
• E)accounted for with a cumulative "catch-up" adjustment in 2016.

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Definitions:

Mission Statement

A formal summary of the aims and values of a company, organization, or individual.

Operating Plans

Comprehensive outlines detailing a company's objectives and the strategies and processes to be implemented to achieve those objectives within a specific timeframe.

Fixed Assets

Fixed assets are long-term tangible assets that are used in the operations of a business and are not expected to be converted to cash in the near term.

Sales Growth Rate

The percentage increase in sales over a specific period, indicating the health and expanding nature of a business.