Where There Are Changes in Accounting Policies That Create Initial

question 64

Multiple Choice

Where there are changes in accounting policies that create initial gains or losses on the first adoption of a new accounting rule:

• A) The gains and losses can be included in the period's income statement.
• B) The gains or losses are recorded as assets or liabilities, and are amortised over the specified period.
• C) The gains or losses can be adjusted against closing retained earnings.
• D) The gains or losses can be adjusted against opening retained earnings.
• E) The gains or losses can be adjusted against the 'Reserves' recorded in the Equity section of the balance sheet.

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Definitions:

Competitors

Other businesses or individuals that offer similar products or services within the same market.

Variable Costs

Costs that change in proportion with the level of output or activity.

Fixed Costs

Costs that do not change with an increase or decrease in the amount of goods or services produced or sold.

Corporate Tax Rate

The percentage of a company's taxable income that it pays to federal, state, or local tax authorities.