A Change in Accounting Principle Requires That the Cumulative Effect

question 8

Multiple Choice

A change in accounting principle requires that the cumulative effect of the change for prior periods be shown as an adjustment to:

• A) Beginning retained earnings of the earliest period presented
• B) Comprehensive income for the earliest period presented
• C) Stockholders' equity of the period in which the change occurred
• D) Net income of the period in which the change occurred

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Definitions:

Corporate Manager

A high-level executive who is responsible for managing the operations and strategic direction of a corporation or a significant part of it.

Shareholders' Benefits

Advantages or privileges that come with owning shares in a company, including dividends, voting rights, and potential appreciation of share value.

Corporate Costs

Expenses incurred by a corporation in the course of doing business.

Situation

The set of circumstances or state of affairs at a particular time and place; encompasses both the physical environment and the context within which something occurs.