Which Statement Is Correct About a Correction of an Error

question 25

Multiple Choice

Which statement is correct about a correction of an error from prior periods?

• A)The correct information was available at the time the error was made.
• B)The correct information was not available at the time the error was made.
• C)One should use hindsight to judge whether there is an accounting error that requires correction.
• D)An example of a correction of an error is the difference between the allowance for doubtful accounts and the actual outcome of bad debts.

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Definitions:

Cash Inflow

The amount of money being transferred into a business, project, or account, usually from operational, investing, or financing activities.

Cash Inflows

The total amount of money received by a company or an individual, from various sources, over a period of time.

Internal Rate

Often referred to as the Internal Rate of Return (IRR), it’s the discount rate that makes the net present value (NPV) of all cash flows from a particular project equal to zero.

Investment Proposals

Formal plans or suggestions put forward for consideration or discussion, especially one concerning financial investment.