Discuss AICPA CPA-Financial Exam Topic 3 Question 27

In single period statements, which of the following should not be reflected as an adjustment to the opening balance of retained earnings?

AEffect of a failure to provide for uncollectible accounts in the previous period.

BEffect of a decrease in the estimated useful life of depreciable equipment.

CCumulative effect of a change from the percentage of completion to the completed contract method of accounting for long-term construction projects.

DCumulative effect of a change from LIFO to FIFO in valuing merchandise inventory.

Suggested Answer: B

Choice 'b' is correct. A change in the estimated useful life of a depreciable asset is a change in estimate handled prospectively. No adjustment to retained earnings is necessary.

Choice 'a' is incorrect. The correction of a failure to provide for uncollectible accounts is considered to be a correction of an error. The opening balance of retained earnings would be adjusted to correct the error.

Choice 'c' is incorrect. This change is a change in accounting principle and is handled retrospectively.

With retrospective application, the opening balance of retained earnings would be adjusted to reflect the cumulative effect of the changes.

Choice 'd' is incorrect. This change is a change in accounting principle and is handled retrospectively.

With retrospective application, the opening balance of retained earnings would be adjusted to reflect the cumulative effect of the changes.

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9 comments · newest first

Janine 11 months ago

I’m not so sure about A, seems like it should count.

Noelia 12 months ago

D is a change that should be reflected, for sure.

Whitley 12 months ago

Wait, isn't C a big deal? Why wouldn't it affect retained earnings?

Glen 12 months ago

I agree, B is also not an adjustment.

Sheridan 1 year ago

A should definitely not be adjusted in retained earnings.

Marcelle 1 year ago

This seems like a straightforward risk management question. I'll focus on assessing the probability and impact of the identified risks to prioritize them for further analysis.

Fletcher 1 year ago

Hmm, I'm a bit unsure about the details of VPWS on the Nokia 7750 SR. I'll need to think this through carefully.

Sherell 1 year ago

This question seems straightforward - the key is identifying the type of cracking mechanism based on the information provided. I'll carefully read through the details and options to determine the correct answer.

Sheron 1 year ago

This looks like a pretty straightforward question. I'll start by thinking through the common reasons a zone might not boot and see if I can identify the five causes.

AICPA CPA-Financial Exam - Topic 3 Question 27 Discussion