Error Corrections Which Involve Restatement of Prior Period Income Must

question 228

Multiple Choice

Error corrections which involve restatement of prior period income must be reported

• A)in a separate account within the equity section of the balance sheet.
• B)within "unrestricted retained earnings" on the balance sheet, with footnote disclosure to describe the appropriation.
• C)as a prior period adjustment on the statement of changes in retained earnings.
• D)only within the footnotes accompanying the financial statements.

Identify the effects of investments on financial statements (unrealized gains/losses, investment income).

Understand the classifications of investments (trading, available-for-sale, held-to-maturity).

Learn about adjustments and reporting for investments in financial statements.

Distinguish between different methods of reporting investments based on the level of influence/control.

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Definitions:

Sale of Land

A financial transaction involving the transfer of ownership of land from one party to another, typically resulting in capital gain or loss for the seller.

Investing Activities

These are transactions related to the acquisition or sale of long-term assets and other investments not included in cash equivalents.

Note Payable

A written promise to pay a specific amount of money, usually with interest, by a certain date.

Financing Activities

These refer to transactions and business events involving the flow of cash between a company and its investors, creditors, and owners, such as issuing shares, borrowing loans, and paying dividends.