Practice final BBUS3211_SW2_PE_10JUL12


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Unformatted text preview: d debt. d. Receipt of the proceeds of a note receivable that was due last year. 6. Berkshire Inc. uses a periodic inventory system. At the end of 2010, it missed counting some inventory items, resulting in an inventory understatement by $600,000. Assume that Berkshire has a 30% income tax rate and that this was the only error it made. If undetected, what is the effect of this error on Berkshire’s 12/31/2010 balance sheet? a. Assets understated by $600,000 and shareholders’ equity understated by $600,000. b. Assets understated by $420,000 and shareholders’ equity understated by $420,000. c. Assets understated by $600,000, liabilities understated by $180,000 and shareholders’ equity understated by $420,000. d. None of the above is correct. 7. A company has cumulative preferred stock. When computing earnings per share, the current year’s dividends not declared on the preferred stock should be: a. Deducted from earnings for the year. b. Deducted, net of tax effect, from earnings for the year...
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This note was uploaded on 02/05/2014 for the course BUS 370 taught by Professor Andreathomas during the Spring '13 term at Capital University.

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