MissTake Corp

question 41

Multiple Choice

MissTake Corp.is a small private corporation that does not prepare comparative statements.At the end of their 2017 fiscal year, it was discovered that the 2016 depreciation expense on their computer equipment had been incorrectly debited to maintenance expense.How should MissTake deal with this situation?

• A)Prepare an adjusting entry to debit depreciation expense and credit maintenance expense.
• B)Prepare an adjusting entry to debit retained earnings and credit maintenance expense.
• C)Restate their 2016 financial statements.
• D)Ignore it.

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Definitions:

Profit-Maximizing Firms

Companies that operate with the goal of making the highest possible profit given their resources and market conditions.

Market Supply

The total amount of a specific good or service that is available for purchase in a given market at various prices, over a specified period.

Market Demand

The overall amount of a product or service that every consumer in a market is ready and capable of buying at different price levels.

Competitive Market

A commercial system where numerous buyers and sellers exist, preventing any single party from setting the price.