A Company Made an Error in Calculating and Reporting Depreciation

question 214

Multiple Choice

A company made an error in calculating and reporting depreciation expense in 2011. The error was discovered in 2012. The item should be reported as a prior period adjustment:

• A) on the 2011 statement of retained earnings.
• B) on the 2011 income statement.
• C) on the 2012 statement of retained earnings.
• D) on the 2012 income statement.
• E) accounted for with a cumulative "catch-up" adjustment.

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Definitions:

Common Causes

Factors that consistently contribute to a process's variability; inherent within the process and usually indicative of systemic issues.

Variation

The extent to which data points in a dataset differ from each other and from their average value.

Control Chart

A graphical tool used in process control to display how a process varies over time and to detect whether a process is statistically controlled.

Attributes Data

Qualitative data that is categorized based on attributes or characteristics, rather than numerical values.