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Notes Part 1 & 2 Quiz

The document contains 4 quizzes with multiple choice questions about accounting for operating segments, accounting policies and changes in estimates, and correcting accounting errors. It provides information on various companies' operating segments and revenues, profits, assets to identify reportable segments. It also includes details on errors made in different years and questions on correcting the errors and their impact on financial statements.

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Ella Mae Layar
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1K views2 pages

Notes Part 1 & 2 Quiz

The document contains 4 quizzes with multiple choice questions about accounting for operating segments, accounting policies and changes in estimates, and correcting accounting errors. It provides information on various companies' operating segments and revenues, profits, assets to identify reportable segments. It also includes details on errors made in different years and questions on correcting the errors and their impact on financial statements.

Uploaded by

Ella Mae Layar
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
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NAME: Date:

Professor: Section: Score:

QUIZ 1: OPERATING SEGMENTS

1. MISCREANT UNBELIEVING Co. is preparing its year-end financial statements and has identified the
following operating segments:
Segments Revenues Profit (loss) Assets
A 2,000,000 400,000 28,000,000
B 2,400,000 280,000 36,000,000
C 540,000 (140,000) 24,000,000
D 480,000 (1,400,000) 2,000,000
E 580,000 100,000 2,800,000
Totals 6,000,000 (760,000) 92,800,000

Requirement: Identify the reportable segments.

2. LIMPID CLEAR Company engages in five diversified operations namely, operations A, B, C, D, and E.
Information on these segments are shown below:

Segments Revenues Profit (loss) Assets


A 1,600 400 20,000
B 1,600 200 4,000
C 100 20 2,000
D 300 40 4,000
E 400 140 14,000
Totals 4,000 800 44,000

Additional information:
a. For internal reporting purposes, segments A and B are considered as one operating segment.
b. Segment E is considered as an operating segment for internal decision making purposes.
c. Segments C and D have similar economic characteristics and share a majority of the aggregation
criteria.

Requirement: Identify the reportable segments.

3. TACITURN SILENT Co. is preparing its year-end financial statements and has identified the following
operating segments:
External Inter-segment Total
Segments revenues revenues revenues Profit Assets
A 2,400,000 1,200,000 3,600,000 1,400,000 24,000,000
B 800,000 200,000 1,000,000 800,000 14,000,000
C 500,000 - 500,000 200,000 2,000,000
D 400,000 400,000 160,000 1,600,000
E 300,000 300,000 140,000 1,400,000
F 200,000 200,000 100,000 1,000,000
Totals 4,600,000 1,400,000 6,000,000 2,800,000 44,000,000

Management believes that between segments C, D, E and F, segment C is most relevant to external
users of financial statements.
Requirement: Identify the reportable segments.

4. FIDELITY LOYALTY Co. has the following information on its operating segments.
External Inter-segment Total
Segments revenues revenues revenues Profit Assets
A 2,400,000 1,200,000 3,600,000 1,400,000 24,000,000
B 800,000 200,000 1,000,000 800,000 14,000,000
C 500,000 - 500,000 200,000 2,000,000
D 400,000 - 400,000 160,000 1,600,000
E 300,000 - 300,000 140,000 1,400,000
F 200,000 - 200,000 100,000 1,000,000
Totals 4,600,000 1,400,000 6,000,000 2,800,000 44,000,000
Question: FIDELITY Co. shall provide disclosure for major customers if revenues from transactions with a
single external customer amount to how much?

QUIZ 2: ACCOUNTING POLICIES, CHANGES IN ESTIMATES & ERRORS

The next three items are based on the following:


Declaration, Inc., is a calendar year corporation. Its financial statements for the years 20x2 and 20x1
contained errors as follows:
20x2 20x1
Ending inventory ₱1,000 understated ₱3,000 overstated
Depreciation expense ₱800 understated ₱2,500 overstated

1. Assume that the proper correcting entries were made at December 31, 20x1. By how much will 20x2
income before income taxes be overstated or understated?
a. ₱200 understated. c. ₱2,700 understated.
b. ₱500 overstated. d. ₱3,200 understated.

2. Assume that no correcting entries were made at December 31, 20x1. Ignoring income taxes, by how
much will retained earnings at December 31, 20x2, be overstated or understated?
a. ₱200 understated. c. ₱2,700 understated.
b. ₱500 overstated. d. ₱3,200 understated.

3. Assume that no correcting entries were made at December 31, 20x1, or December 31, 20x2, and
that no additional errors occurred in 20x3. Ignoring income taxes, by how much will working capital
at December 31, 20x3, be overstated or understated?
a. ₱0. c. ₱1,000 understated.
b. ₱1,000 overstated. d. ₱1,700 understated.

The next three items are based on the following:


The bookkeeper of Latsch Company, which has an accounting year ending December 31, made the
following errors:
 A ₱1,000 collection from a customer was received on December 29, 20x0, but not recorded until the
date of its deposit in the bank, January 4, 20x1.
 A supplier's ₱1,600 invoice for inventory items received in December 20x0 was not recorded until
January 20x1. (Inventories at December 31, 20x0 and 20x1, were stated correctly, based on physical
count.)
 Depreciation for 20x0 was understated by ₱900. In September 20x0, a ₱200 invoice for office
supplies was charged to the Utilities Expense account. Office supplies are expensed as purchased.
 December 31, 20x0, sales on account of ₱3,000 were recorded in January 20x1.

Assume that no other errors have occurred and that no correcting entries have been made. Ignore
income taxes.

4. Profit for 20x0 was


a. Understated by ₱500. c. Overstated by ₱2,500.
b. Understated by ₱2,100. d. Neither understated nor overstated.

5. Assume the same facts as above. Working capital at December 31, 20x0, was
a. Understated by ₱3,000. c. Understated by ₱1,400.
b. Understated by ₱500. d. Neither understated or overstated.

6. Assume the same facts as above. Total assets at December 31, 20x0, were
a. Overstated by ₱2,500. c. Understated by ₱2,500.
b. Overstated by ₱2,100. d. None of the above.

“Let us therefore come boldly to the throne of grace, that we may obtain mercy and find grace in time
of need.”
(Hebrews 4:16)

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