Yee Construction Co

question 41

Multiple Choice

Yee Construction Co.had followed the practice of expensing all materials assigned to a construction job without recognizing any residual inventory.On December 31, 2016, it was determined that residual inventory should be valued at ¥56,000.Of this amount, ¥23,000 arose during the current year.Based on this information, all of the following statements are true regarding the effect on the financial statements to be prepared at the end of 2016 except

• A)¥23,000 should be reported in the 2016 statements as a reduction of materials cost.
• B)¥33,000 should be reported as an adjustment to the beginning balance of retained earnings in the 2016 financial statements.
• C)This change should be handled as a correction of an error.
• D)This change should be handled as a change in accounting estimate.

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Definitions:

Law Of Effect

One of Thorndike’s laws of learning, which states that the consequence, or effect, of a response will determine whether the tendency to respond in the same way in the future will be strengthened or weakened.

Edward Thorndike

An influential psychologist known for his work on learning theory and the law of effect.

Formulated

The process of creating or devising a strategy, plan, or concept in a detailed and systematic manner.

Condition Your Dog

The process of training your dog to behave in a certain way or respond to certain commands through the use of rewards and punishments.