Which of the following transactions would be least likely to have an effect on the net income for 2020? A : Stock purchased in 2003 and deemed worthless in 2020. B : Correction of an error in the financial statements of a prior period discovered subsequent to their issuance. C : Collection in 2020 of a dividend from an investment. D : Sale in 2020 of an office building contributed by a stockholder in 1971.

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8 March, 10:04

Which of the following transactions would be least likely to have an effect on the net income for 2020? A : Stock purchased in 2003 and deemed worthless in 2020. B : Correction of an error in the financial statements of a prior period discovered subsequent to their issuance. C : Collection in 2020 of a dividend from an investment. D : Sale in 2020 of an office building contributed by a stockholder in 1971.

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Gunnar Freeman · Answer 1

B : Correction of an error in the financial statements of a prior period discovered subsequent to their issuance

Explanation:

As the accounting uses the matching principles to assing revenues and expenses a prior perior expense will not affect the current period of 2020.

The accountning should represent the reality and the event that generate the income/expense was before 2020 Thus, it should not affect 2020

Else, the information will be tained as 2020 period is taking expenes fro mother period making the current income understated.