When Disclosing the Impact of a Retrospective Adjustment for the Change

question 21

Multiple Choice

When disclosing the impact of a retrospective adjustment for the change from LIFO to FIFO in 2011, which of the following impacts is not expected to be reported in the comparative financial statements when two-year comparative statements are presented?

• A)impact on beginning inventory for 2010
• B)impact on 2010 net income
• C)impact on ending inventory for 2011
• D)impact on cost of goods sold for 2010

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Definitions:

Net Present Value

A calculation that compares the value of a dollar today to the value of that same dollar in the future, taking inflation and returns into account; used in capital budgeting to analyze the profitability of an investment or project.

Forward Exchange Rate

The exchange rate at which two parties agree to exchange currencies at a future date.

Forward Trade

A non-standardized contract between two parties to buy or sell an asset at a specified future date for a price that is agreed upon today.

Spot Exchange Rate

The current price for exchanging one currency for another for immediate delivery, reflecting the value of one currency in terms of another at a specific moment in time.