Explain How Each of the Following Items Should Be Reported

question 159

Essay

Explain how each of the following items should be reported by a corporation:
(1)The accounting department discovered that an entry was made last year to Insurance Expense instead of to Prepaid Insurance.The after-tax effect of the charge to Insurance Expense was $5,000.
(2)The accounting department determined the depreciable lives of equipment will be five years instead of the original estimate of seven years.

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Definitions:

Interest Rates

The percentage charged on a loan or paid on savings, effectively the price of capital.

Microeconomics

The study of economic behavior and decision-making by individuals and firms, focusing on the mechanisms that govern the allocation of resources.

Individual Consumers

Individuals who purchase goods and services for personal use from the market.

Interest Rates

The percentage of a sum of money charged for its use, reflecting the cost of borrowing or the return on savings.