AICPA Exam CPA-Financial Topic 1 Question 103 Discussion

Actual exam question for AICPA's CPA-Financial exam

Question #: 103
Topic #: 1

Conn Co. reported a retained earnings balance of $400,000 at December 31, 1991. In August 1992, Conn determined that insurance premiums of $60,000 for the three-year period beginning January 1, 1991, had been paid and fully expensed in 1991. Conn has a 30% income tax rate. What amount should Conn report as adjusted beginning retained earnings in its 1992 statement of retained earnings?

A$420,000

B$428,000

C$440,000

D$442,000

Show Suggested Answer

Suggested Answer: B

Choice 'b' is correct. $428,000 net of tax.

by Pok at Nov 15, 2024, 01:37 PM

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Bulah

3 months ago

But if the insurance premiums were expensed in 1991, shouldn't the adjusted beginning retained earnings be higher?

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Annabelle

3 months ago

I disagree, I believe the correct answer is B) $428,000.

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Hildred

3 months ago

Option B) $428,000 is the way to go. These types of questions really make you think, but it's all about that attention to detail.

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Shawna

3 months ago

I'm going with B) $428,000. Seems like a straightforward calculation once you account for the insurance premium issue.

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Reiko

1 months ago

I see your point, but I still think it's B) $428,000. I believe that's the adjusted beginning retained earnings for 1992.

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Phillip

2 months ago

I'm not sure about that, I'm leaning towards D) $442,000. It seems like the correct amount after considering the insurance premium adjustment.

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Niesha

2 months ago

I agree with you, I also think it's C) $440,000. The adjustment should be added to the beginning retained earnings.

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Alfreda

2 months ago

I think it's C) $440,000. The insurance premium issue would increase the beginning retained earnings.

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Bulah

3 months ago

I think the answer is A) $420,000.

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Mee

3 months ago

Definitely B) $428,000. Gotta love those tricky accounting adjustments, am I right? *winks*

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Vicky

3 months ago

Yes, accounting can definitely be tricky sometimes, but it's important to get the numbers right.

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Audry

3 months ago

It's always interesting to see how these adjustments can impact the financial statements.

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Pauline

3 months ago

I agree, B) $428,000 seems to be the correct amount after adjusting for the insurance premiums.

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Glen

3 months ago

Hmm, I think the correct answer is B) $428,000. We need to adjust the retained earnings balance to account for the insurance premiums that were fully expensed in 1991 but should have been amortized over the 3-year period.

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