A Company Made an Error in Recording the 2009 Purchase

question 138

True/False

A company made an error in recording the 2009 purchase of computer equipment as an expense. This was discovered in 2011. The item should be reported as a prior period adjustment on the 2009 income statement.

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Definitions:

Tax Effects

Tax effects are the impact of tax laws and policies on an individual's or company's financial situation, including how taxes influence investment returns, net income, and economic decisions.

Accrued Revenue

Revenue that has been earned but not yet received in cash or recorded by the accounting system.

Management Fees

Fees paid to managers for operating investment funds or managing assets.

Unrealised Profit

Profit that has been earned but not yet received in cash or recorded in the financial statements, often resulting from intra-company transactions.