Accounting Errors Exam Prep

AIPB Mastering Correction of Accounting Errors Exam Prep (Latest Update 2025 / 2026) Questions & Answers | Grade A | 100% Correct (Verified Solutions)

Question:

If an accrued revenue is understated and the error is discovered in the same accounting period, a correction is made with a(n) ___ journal entry for the amount of error.

Answer:

adjusting

Question:

An error not discovered until after the books have been closed is corrected with a(n) ___ ___ ___

Answer:

prior period adjustment

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Question:

If interest receivable was not accrued at the end of 20X1, then 20X1 revenues will be ___ and income will be ___.

Answer:

understated, understated

Question:

If an accrual of rent expense was omitted at the end of 20X1, then 20X1 liabilities would be ___ and income would be ___.

Answer:

understated, overstated

Question:

Missing or inaccurate accruals are often found...

• when an expense is paid
• when revenue is received
• when the financial statements are prepared
• all of the above

Answer:

• all of the above
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Question:

A more precise definition of prior period error would include one that is found...

• after the income statement accounts have been closed for the year in which

the errors were made

• after the balance sheet accounts have been closed for the year in which the

errors were made

• after either the balance sheet accounts or the income statement accounts

have been closed for the year in which the errors were made

• after December 31 of the year in which they occurred

Answer:

• after the income statement accounts have been closed for the year in which

the errors were made (bc statement zeroed out)

Question:

___ period errors affect revenue and expense accounts that are still open.

Answer:

current

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Question:

In 20X1, the accrual of rent expense was overstated by $1,000. A correcting

entry made before the books are closed would include:

• a debit to Rent Expense for $1,000
• a credit to Rent Expense for $1,000
• a credit to Rent Payable for $1,000
• a credit to Cash for $1,000

Answer:

• a credit to Rent Expense for $1,000

Question:

Accounting error correction depends on the ___ in which the error is discovered.

Answer:

period

Question:

Errors that affect revenue or expense accounts from prior periods cannot be directly corrected because these account balances have been ___.

Answer:

closed

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