AICPA CPA-Financial Exam - Topic 3 Question 25 Discussion

Actual exam question for AICPA's CPA-Financial exam

Question #: 25
Topic #: 3

While preparing its 1991 financial statements, Dek Corp. discovered computational errors in its 1990 and 1989 depreciation expense. These errors resulted in overstatement of each year's income by $25,000, net of income taxes. The following amounts were reported in the previously issued financial statements:

Dek's 1991 net income is correctly reported at $180,000. Which of the following amounts should be reported as prior period adjustments and net income in Dek's 1991 and 1990 comparative financial statements?

AOption A

BOption B

COption C

DOption D

Show Suggested Answer

Suggested Answer: C

Choice 'c' is correct. 1990 ($25,000) $125,000

1991 -- 180,000

Because these are comparative financial statements, prior period adjustments require retroactive treatment for the years presented. Because 1989 is not presented, the 1989 correction is shown as a prior period adjustment of $25,000 to retained earnings statement of 1990.

by Weldon at May 06, 2022, 11:00 AM

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Carmelina

4 months ago

Agreed, this could really impact their financials!

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Matilda

4 months ago

Are we sure those calculations are accurate? Seems off.

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Cherelle

4 months ago

I think Option B looks right for the adjustments.

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Twana

4 months ago

Definitely should adjust the prior period statements.

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Mindy

5 months ago

Wow, $25,000 overstatement each year? That's significant!

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Abel

5 months ago

I'm a little confused by this question. The event details don't seem to give me enough information to definitively identify the correct module. I'll need to review my notes and try to eliminate the options that don't fit before making a final decision.

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Sheron

5 months ago

Okay, I've got this. Leadership commitment, oversight, and partnerships are definitely critical for driving performance improvement initiatives. I'll make sure to select those options.

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Paola

5 months ago

Okay, I think I've got this. The !ctrl:c2 attribute is telling Volume Manager to exclude devices connected to controller c2, so the answer must be A.

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Amalia

5 months ago

I remember CRM is definitely about meeting customer needs, so I think option A makes sense.

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