A Company Forgot to Record Four Adjustments During 2013

question 92

Multiple Choice

A company forgot to record four adjustments during 2013.Which one of the following omissions of adjustments will understate net income?

• A)Sales made during the last week of the period are not recorded.
• B)Interest on monies borrowed has not yet been recorded.
• C)Prepaid insurance is not reduced for the portion of the policy that has expired during the period.
• D)Income taxes owed but not yet paid are ignored.

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Definitions:

Non-controlling Interest

A stake in a company that is less than 50%, implying that the holder does not have control over the company's operations.

Equity

The value of an ownership interest in a company, calculated as company assets minus its liabilities and representing the net assets owned by shareholders.

Acquisition Date

The exact date on which control of a business is obtained by the acquirer, upon which the acquirer applies acquisition accounting.

Non-controlling Interest

The portion of equity interest in a subsidiary not attributable to the parent company.