A Company Changes Its Depreciation Method from an Accelerated System

question 28

Multiple Choice

A company changes its depreciation method from an accelerated system to straight-line. Which of the following would normally be true?

I. The change would be discussed in the auditor's report.
II. The cumulative effect of the change would appear, net of tax, on the income statement.
III. The change would appear in cash flow from operations as a cash inflow.
IV. The change would be mentioned in the footnotes.

• A)I, II, III, and IV
• B)I, II, and III
• C)II and IV
• D)I, II, and IV

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Definitions:

Rightward Shift

In economic graphs, a movement to the right of a curve, indicating an increase in supply or demand depending on the context.

Home-Delivered Pizza

Pizza that is made and delivered directly to a customer's home by a restaurant or pizza delivery service.

Population

The entire group of individuals or instances about whom we seek to make conclusions in statistical analysis or the number of inhabitants in a particular region or place.

Increase in Demand

A situation where there is a rise in the quantity of a product or service that consumers are willing and able to purchase at existing prices.