Which One of the Following Statements Is True

question 37

Multiple Choice

Which one of the following statements is true?

• A)Using straight-line depreciation for all newly acquired assets when double-declining-balance depreciation was used in the past does not require a cumulative-effect adjustment.
• B)An obvious error in recording depreciation expense in a prior year should be corrected by adjusting the current year's net income.
• C)A change from straight-line to sum-of-the-years'-digits depreciation should be handled prospectively.
• D)Changes in depreciation estimates are prior-period adjustments.

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Definitions:

FIFO Method

A method of inventory valuation where the first items placed in inventory are the first ones sold, standing for First-In, First-Out.

Ending Inventory

The total value of all goods available for sale at the end of an accounting period.

Spark Plugs

An engine component that ignites the fuel-air mixture in the combustion chamber of gasoline engines.

Market Value

The current quoted price at which an asset or a company can be bought or sold in a marketplace.