Practice final BBUS3211_SW2_PE_10JUL12

Assumethatberkshirehasa30incometaxrateandthatthiswasth

Info iconThis preview shows page 1. Sign up to view the full content.

View Full Document Right Arrow Icon
This is the end of the preview. Sign up to access the rest of the document.

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...
View Full Document

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.

Ask a homework question - tutors are online