MASTERING CORRECTION OF

ACCOUNTING ERRORS

Test corrections for missed questions:

13. Which of these errors is easiest to find and correct?

a. crediting Sales Revenue instead of Accounts Receivable for a

payment

b. the Accumulated Depreciation balance in the debit column of a trial balance

c. incorrect computation of the Notes Payable account balance

Use the following information to answer questions 23-24.

On July 1, 20X0, CriCo takes out a 10%, $10,000 note payable that is due on July 1, 20X1. No interest is accrued at year-end 20XO.

23. If no corrections are made, which of the following statements is correct?

a. On CriCo's 20X0 income statement, net income is understated by $500.

b. On CriCo's 20X0 income statement, net income is overstated by $500.

c. On CriCo's 20X0 balance sheet, retained earnings is understated by $500.

d. On CriCo's 20X0 balance sheet, liabilities are overstated by $500.

24. To correct this error in 20X0, you need to record just the adjusting entry that was not made because..

a. an expense account is involved

b. no error was made recording the note payable on July 1, 20XO

c. an accrual is involved rather than a deferral

d. the books have not been closed

27. While writing a check for $2,000 on April 26, 20X2 for a computer purchased on December 26, 20X1, you discover that when the purchase was made in December, the $2,000 had been credited to Notes Payable instead of Accounts Payable. If the books are closed, what single entry could you make?

a. Notes Payable 2,000

Cash 2,000

b. Accounts Payable 2,000

Cash 2,000

c. Accounts Payable 2,000

Notes Payable 2,000

36. The error described in question 35 is likely to be discovered because . . .

a. inspection of the trial balance would reveal Machinery had a balance that was not normal

b. inspection of the trial balance would reveal Machinery Maintenance Expense had an unusually large balance

c. none of the above

39. Which of the following is an example of an accrual error?

a. failure to adjust Inventory to its proper balance at year end

b. failure to record depreciation at year end

c. none of the above